Monday, May 28, 2012

Editorial Calls for Openness in Tax Policy

From John Ketzenberger, President of the Indiana Fiscal Policy Institute, in the Indianapolis Star:
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Is it possible to bring about a complete levy-equals-spending understanding of the tax system? No, but I challenge the candidates for governor to set a good example for all who wield the power to tax-and-spend during this campaign. Here's how:

Acknowledge that Indiana, compared with other states, already is a low-tax state. The Tax Foundation, for instance, ranks Indiana's tax climate the 10th-most favorable. Just this year the General Assembly reduced the corporate income tax and started a process to eliminate the inheritance tax.

Any tax cuts should be accompanied by a clear explanation of what services the state/local government will reduce or no longer provide as a result of less tax revenue.

If, in the unlikely event a proposed tax increase occurs, a similar explanation for spending the additional revenue is expected.

Circumstance No. 3 is more likely to happen at the local level because state tax policy has reduced property tax revenue in many places.

Take a holistic view of the system and explain clearly how any proposed changes will affect other parts of the tax code.

Keep all fiscal policy options open. Ignore Grover Norquist's no-tax pledge.

Realize we're all in this together. The point is not to game the system, but to create one that is fair to all people who live, work or play in Indiana.

This is why it is important for politicians to be straightforward about their tax proposals. Good public finance is not as simple as merely raising or cutting taxes or cutting or increasing spending. It's a balanced equation that takes into account the public's needs and desires, and its willingness to pay for them.
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http://www.indystar.com/apps/pbcs.dll/article?AID=2012205280303