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All of this talk of repealing Indiana’s income tax is ridiculous. There is no way to do it without bankrupting the state, bankrupting Indiana’s poorest, or increasing business/corporate taxes to make up the difference. We all know that Indiana isn’t going to raise corporate taxes anytime soon, and the other two options are untenable.
Use the tax revenue that Indiana does generate to invest in the state. If lawmakers are going to be hell-bent on reducing taxes even further, lawmakers should refund surplus money to reimburse low income individuals and families for sales taxes.
Won’t the highest earners spend more and thus pay more in sales tax?
Generally, no, higher earners don’t add additional spending sufficient to cover the tax change. There is only so much people buy in goods, vs. services. Once a certain level of consumption is reached, additional funds tend to go to retirement funds, savings accounts, invest in education for children, increase charitable donations. Or to travel and maybe investments in out of state property. But not to purchases of basics, or even luxuries, sufficient to close the tax revenue gap back in Indiana.
By that logic, each time we cut taxes, we should come out ahead. Yet the deficit always seems to go up, as the supposed income from people spending more never replaces the lost income. This has happened numerous times the last few decades, yet people still believe it.
Agree with comments in article that Indiana already places too much burden on low income vs. upper. Long overdue to close loopholes as well as create more graduated system vs. flat tax. Low income should NOT be spending a higher percentage of their earnings than high income. I moved here from New York back in 1978, and was shocked by how much I was required to pay in taxes, compared to NY. It seemed unfair then based on how little I was making, and still is today. Eliminating income taxes as others have said is not the answer. Make the system fairer.
Stop the Cap
Taxing groceries should be a non-starter.
Increasing one tax to eliminate another is robbing Peter to pay Paul.
Just as an aside, interesting someone named Matthew would be discussing taxes that rob Peter to pay Paul, as St. Matthew was a tax collector…sorry, I digress. I mean no ill will, it just struck me. I attend St. Matthew Church in Indy. Matthew the tax collector is never far from mind.
You assume, Matthew, that the intent of the Indiana legislature and its supermajority party is to be fair in its taxing decisions and plans. And to not be robbing Peter (the poor) to assist Corporate Paul. There’s scant evidence in the taxing decisions of the last decade to suggest that Poor Peter even enters into their decision making.
Legalizing marijuana could help increase tax revenue and may help offset SOME of the income taxes. I don’t think a state as small in population as Indiana could eliminate income taxes without some additional revenue that wouldn’t burden the underprivileged. Washington State has roughly the same population, but they do not have income taxes, but they have a higher corporate tax rate. Indiana would never increase taxes on corporations so if they are serious, they need to find new revenue streams.