Saturday, February 15, 2014

Styring: Stereotypes Aside Business Taxes Matter

By Bill Styring  in the Indianapolis Business Journal:

Gov. Mike Pence has proposed eliminating property taxes on business machinery and equipment. How exactly that is to be done, and over what time frame, he has left to the wisdom of the General Assembly.

That’s his style. Even though his party has quorum-proof majorities in both chambers, it’s not in his DNA to say, “Here’s my 14-point plan, now pass it!”

That’s not, in any case, the way to win favor with the finance barons who run legislative committees in Rooms 404 and 431 of the Statehouse. These worthies tend to think they have a better way to do things than anything coming from the executive branch—and often they are right.

But just what is the role of the “business tax climate” in the future course of Indiana’s economy, or any state’s economy?

In a cynical sense, this question is of limited relevance. Some legislators (mainly, but not entirely, Republican) react positively to any tax-cut proposal. Small-government types who deep down suspect there’s so much fat and stupidity in government that any tax cut will produce welcome gains in efficiency. (Disclosure: my sympathies generally lie with these folks). Deduct 50 points from the government side of the ledger before weighing costs and benefits.

Other legislators (mainly, but not entirely Democrats) view any tax cut as starving vital public services of critical resources.

Bigger-government types argue inter alia that what really counts are government-supplied “quality of life” amenities (palladiums, mass transit, etc.) and educated work forces that only gunning the public budget can satisfy. This camp always adds 50 points to the government side.