By Brian Howey in the Elkhart Truth:
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Last week, the Howey Politics Indiana Poll reinforced the notion that Hoosier voters wanted a tax cut. The poll by Bellwether Research showed that while 39 percent supported the Pence tax plan, 33 percent supported the Senate Republican version which called for a 3.3 percent cut. Combined, that was 72 percent favoring some form of a tax cut. Only 17 percent said neither. Still, 60 percent were not supporting Pence’s plan.
Asked when the deal was struck, Pence paused for a considerable moment, then said, “I think it was the night before the deal was announced.” That came on Thursday, when the tax cut package included 5 percent, not 10 percent, on the income tax cut, as well as accelerating the inheritance tax repeal, and a rollback in the corporate and financial institutions’ taxes.
“After the Senate produced their budget that included income tax relief,” Pence continued, “we began in earnest around this table to meet on a daily basis, sometimes more often, with the fiscal leaders of the House and Senate, and there was a lot of give and take. You’ve got to understand I’m someone who believes you ask for the order and I kept on asking for what we had proposed.”
“But at the end of the day, I think the tax relief we crafted together was better than what I was proposing,” Pence acknowledged. “In the end, I’m convinced that income tax cut, the inheritance tax and the financial institution tax was just the right relief at the right time.”
House Minority Leader Scott Pelath, the Michigan City Democrat, saw it as a “missed opportunity” for the middle class: Not much money into the wallets and not enough to spur job creation.
When in full effect, the numbers look like this: $1 million in income (say a small business) equals $1,700 a year; $500,000 in income (say a smaller business) equals $850 a year; $100,000 household income equals $170 a year; $50,000 household income equals $85 a year.
The $850 cut equals about $70 a month or $2.30 a day (which would be good for a latte at Starbucks). Some speculate that an income tax cut that size will not stimulate job creation, but might help with job retention at the margins for the smaller businesses filing as individuals.
Bigger job creation potential is in the already passed cuts in the corporate income tax rate from 8.5 percent to 6.5 percent and the inheritance tax elimination. Small businesses and farms can now be passed on to subsequent generations and there likely will be fewer break-ups or sales to fund a tax liability. Banks and c-corps, in theory, will have more cash to fund expansions, make hires or return to shareholders.
Pence sees beyond the small amount of money middle class Hoosiers will get, instead focusing on $300 million eventually spilling into the state’s economy that is still beleaguered by an 8.7 percent jobless rate. It’s been in that range going on five years now.
“My message to employers large and small is that it’s time to invest in Indiana,” Pence said. “And my message outside of the state is, ‘It’s time to come to Indiana.’”
So we’ll see whether these cuts will result in jobs and what the political impact on the 2014 and 2016 elections will be.
http://www.elkharttruth.com/article/20130502/OPINION/705029947&source=RSS
