By
Mara Candelaria Reardon in the Northwest Indiana Times:
It was good idea to make changes to help Hoosier families. However, I don’t believe that was accomplished.
I am a staunch proponent of public participation. In fact, everything we do in the General Assembly is broadcast live on the Internet and public input is always welcomed. The general public — ordinary Hoosiers, in other words — wasn’t allowed to attend any of these hearings.
Instead, the event was full of paid professionals who rabidly espouse the kinds of theories that have contributed to the severe income inequality that exists in Indiana — where the average income of the top 1 percent is more than $650,000, while the remaining 99 percent makes an average of just under $39,000.
But the governor has said he welcomes all suggestions as this debate moves toward actual policy considerations.
My suggestion is to seek the reinstatement of an income tax reciprocity agreement with Illinois.
Indiana has reciprocal agreements with five other of our surrounding states: Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. All salaries, wages, tips, and commissions earned in these states by an Indiana resident must be reported as if they were earned in Indiana. In turn, residents from those states, who have Indiana income report and pay taxes on that income in the state where they live. The lack of a reciprocity agreement means region residents pay the higher Illinois income tax rate, which has risen 67 percent since 2011.
You can imagine what a benefit such an agreement would be for people in our area who work in Chicago. As a matter of fact, Lake County residents did have that benefit until Illinois canceled it on Jan. 1, 1998, in an apparent fit of pique that too many Hoosiers were earning a living in Illinois, but not paying their fair share of taxes in Illinois.
Since then, far too many people in our area have been paying more taxes than they should, simply because they work in another state. This has gone on for close to 15 years, and it should stop.
There already exists within state law (Indiana Code 6-3-5-3) provisions that would make it easy for Illinois and Indiana to enter into another reciprocal agreement. The two states would figure out a formula for determining the amount of income taxes by the residents of each state to the other state, then settle up at the end of the year through a payment.
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