Shaw Friedman: AFP is right on road taxes
Thursday, February 04, 2016 10:20 AM
LaPORTE – Under the theory that even a blind squirrel finds an acorn now and then or that a broken clock is right twice a day, the Koch Brothers-funded Americans for Prosperity got it right for once; there’s no need to raise taxes in Indiana to fund roads. Yes, we need to “prioritize existing funds better” as AFP urges, but we better also stop the loss of needed tax revenues by putting a moratorium on further tax cuts scheduled in corporate, bank and individual income taxes.
We also better look at a fairer distribution of highway and road dollars, as currently there’s a massive disparity between regions. The LaPorte County Commissioners released data in 2015 showing that the affluent suburbs around Indianapolis that make up the Greenfield INDOT district received $1.7 billion more in funds for state highways, interstates and roads over the past 10 years than the INDOT district in Northwest Indiana received.
That’s how we end up with gold-plated highways like the Keystone Parkway in Hamilton County while roads and bridges are crumbling across Northwest Indiana. Now, if we can only get AFP to sign on to the moratorium called for by State Sen. Karen Tallian (D-Portage) and others, who point out that continued phased reductions in our corporate tax rate, bank tax rate and individual tax rates simply gut needed revenues for new road construction. Can I get an amen from AFP?
There is little question that Speaker Bosma and State Chamber head Kevin Brinegar are barking up the wrong tree in calling for tax increases on the little guy to pay needed road improvements in our state. The plan, devised by Rep. Ed Soliday (R-Valparaiso), backs a mixture of gas tax increases, increased local option taxes and even considers tolling I-65 and I-70.
If we need the revenue to do the road improvements that all agree we need, let’s stop poking holes in our revenue stream. I’m not talking about hiking taxes, which forces legislators to go back on their no tax pledges or offends groups like AFP, but it means putting a moratorium on further scheduled tax reductions like those pushed by Gov. Pence in 2013.
The corporate income tax and the financial institutions tax paid by the big banks had rates that started at 8.5% in 2013 and are scheduled to phase down to 4.9% by 2021. That’s a 42% decrease. The scheduled reductions in the income tax rate from 3.4% in 2013 to 3.23% in 2017 also creates a revenue hole. As Sen. Tallian has pointed out, the future rate reductions for these three taxes equal more than $2.27 billion in state revenue dollars lost over the next eight years.
Why continue shredding our tax revenue base? As Gary Malone, CPA and partner at Umbaugh, wrote in a great op/ed for Indianapolis Business Journal recently, low tax rates are no bargain in helping attract new business if they reduce the quality of our communities, our public schools or our infrastructure. CNBC in their annual business climate survey says the cost of doing business in Indiana is now lowest in the country, but they still rank us 42nd for workforce training, 46th for quality of life and 22nd for infrastructure.
How about collecting what’s already owed to Indiana by closing tax shelters and loopholes being used by the largest multi state and multinational corporations to evade taxes that are owed to Indiana coffers? The highly respected, nonpartisan Multi-State Tax Commission says $400 million a year is lost to Indiana by corporations taking advantage of offshore tax shelters and other dodges like transfer pricing. When will we hear from Bosma and Brinegar about that lost income? Nothing but crickets from the Bosma/Brinegar tandem when it comes to asking big business to do their fair share and pay what’s already owed.
Can I get another “amen” from Americans for Prosperity?
AFP, I’m not talking about “raising taxes” but merely halting planned reductions of both corporate income taxes, the bank tax and individual income tax rates as well as collecting that which is already owed to the state treasury.
That’s the adult conversation that Speaker Bosma and the Chamber’s Kevin Brinegar aren’t willing to have. They congratulate themselves and Rep. Soliday for supposedly having the “courage” to ask ordinary, hardworking Hoosiers to kick in more in gas taxes, local option taxes and tolls on our interstates, but absolutely refuse to ask the most profitable corporations that do business in Indiana and use our roads and highway system to do their fair share. For one brief shining moment, economic progressives and the Koch Brothers share a common theme that it is absolutely not necessary to hit “the little guy” with higher taxes to fix roads. The planets may have aligned ever so briefly and I suspect we’ll be parting company soon, but it’s a rare moment of agreement that is certainly worth noting.
Shaw Friedman is former legal counsel for the Indiana Democratic Party.