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Regressive Indiana

By Jim Sack

Fort Wayne Reader

2015-03-05

Regressive? Indiana? Can’t be…

Well, seems our state is ranked as one of the 10 worst in the country for retirees and middle class families. According to “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” a report released by the Institute on Taxation and Economic Policy (ITEP), Indiana is among the toughest states on the middle class and poor. In short, we transfer our modest wealth through tax policy to the upper one percent. Trickle down is really suck up, as they might put it. The study shows that Indiana households earning between $34,000 and $56,000, our middle class, had the fourth highest tax burden nationwide in that category.

What’s more, the study indicated that Indiana’s rate of increasing inequity had grown faster over the past five years than any other state in the country.

In short, the middle class pays twice the tax rate as the top 1% in Indiana and the poor pay proportionally seven times as much.

In all of America our state ranks as the eighth most aggressive at collecting taxes from that bottom twenty percent of earners, the poor. Any visit to city council shows how willing our leaders are to take that money and hand it to companies in the form of tax abatements, incentives and the like. Wealth transferal?

You might guess how this happens. First, wage earners have all of their income on the paystub while those in business can shelter or hide income under the table.

Then there is tax policy that allows a businessman to write off many expenses that have at best a tenuous relationship to business transactions. And Indiana has one of the highest sales tax rates in the country. Sales taxes are generally considered regressive, taking a greater share of the incomes of the poor and middle class.

Oh, and there are those sweetheart deals between businessmen and government, often called economic development, where public land and resources are transferred from your ownership to that of a businessman or ”investors.” We recently saw a multi-million dollar deal in Fort Wayne that illustrates the point, but such transfers of public wealth to private hands happens all over the state. Taxes will be abated for the rich few.

All of this and more is why there is a growing gap between the have-nots and the have-yachts. Or, put another way, you can’t pull yourself up by the bootstraps if you can’t scrape together enough cash to buy boots, or if the government has taxed the boots right out of your closet.

Speaking of sweetheart deals, did you read that our legislature plans to give tax breaks to charter school investors who suffered losses? A tax break. At your expense. For investors who failed? Isn’t that what the right might label socialism?

The legislature plans to give a break to those rich investor with one hand while cutting funding for the public schools with the other. Picking winners and losers, the right might rail if it were not their winners and somebody else losers…

Meanwhile, in addition to the tax break for the rich the legislature will increase funding for charter schools which are, at best, short on achievement, (like their investors), but long on promises. It is estimated Fort Wayne schools will lose $2 million over the next two years. That’s a lot of crayons and writing paper, not to mention fewer (union) teachers, probably the real target of this attack.

Remember the scandal centered around grade inflation that drove the last Superintendent of public instruction from his job? He jacked around their numbers to help crony investors who failed to educate, but still wanted the rewards of success. Perhaps among those who are attacking Bennett’s replacement, Glenda Ritz, are a few of those investor/contributors he protected who again need a bit of public assistance to make ends meet.

Oh, and how do our great legislators and pious governors keep themselves in power, you might ask, when their failures hit the middle class the hardest? Misrepresentation and institutionalization of corruption are two of the answers.

Here is just a small example: when our city council goes about redistricting every ten years, they do not turn the job over to neutrals, they handle the job themselves making sure to protect themselves from challenges. We have become a nation of polarized, safe districts.

Legislators handle their own pay raises and appoint themselves to boards and commissions to oversee themselves and protect their interests. Meanwhile, they pat themselves on the back and point to their economic development triumphs with charts and graphs that mean nothing. Over the years in Allen County a half-billion dollars have been handed to businesses as economic development breaks. What have you gotten in return? A tax hike? Then another. Then another. COIT. LOIT. CEDIT.

Where are the jobs, one citizen demanded at council after years of abatements and incentives. Local government could show scant little proof any jobs had been created. And, average local income has dropped steadily since the 80s compared to the rest of the country. Our slogan should be: Indiana, land of false hope, or perhaps Socialism for the Rich!

So, if you wonder why your family is struggling to make ends meet it is because your politicians in Indianapolis and Allen County have turned control of the state over to people who see you as a commodity to be hired under right-to-work and fired “at will,” to be taxed at a much higher rate than the rich and to be called on time and time again to make up the shortfall in budgets with a tax hike, a user fee, a toll, or to turn public resources over to private “stewardship.” First and foremost, cronies want to profit from their investments, and expect you to cover their losses.

Regressive applies not only to sales taxes…