Tag Archives: low taxes

Creating A City That Works

The Indianapolis Chamber of Commerce–like most such entities–is concerned with the economic future of our city, and the region it inhabits.  Recently, it engaged in a planning exercise–engaging a consultant to survey a wide variety of stakeholders and to analyze efforts of “peer cities” to see what strategies work.

Among the conclusions reached in this exercise was one I feel was particularly important, and I quote: “economic success wasn’t dictated by the most generous tax breaks. Prosperous regions focused on the bigger picture.”

Your immediate reaction to this insight–gained from “thousands” of survey results, no less–was probably something like “duh.” But that doesn’t make it any less important, doesn’t lessen the impact. Bear with me.

For at least the past quarter-century, Americans have been sold a bill of goods: if taxes are kept sufficiently low, all will be well. Nothing else really matters. That’s all it takes.

Are your parks overrun with dandelions and weeds?  Are you closing libraries? Do you have too few police to patrol dangerous neighborhoods? Does the paving on your streets look like battle zones in Syria? Do you lack decent public transportation? Are teachers decamping for places that support public education?

Not a problem! Our taxes are low!

The Chamber’s strategic plan discloses the utter cluelessness of this mantra.

Think about it: if you were getting ready to move (for example, if–God forbid–Donald Trump won the Presidency and you were frantic to leave the good old USA) where would you choose to go?  Would you choose a third-world country with expensive healthcare, iffy public safety, no reliable public transportation, decaying infrastructure and low taxes? Or would you choose a low-crime country with excellent national healthcare, great infrastructure (both digital and physical), superior education, and higher taxes?

Here’s the deal: the existence of a superior infrastructure–roads, bridges, electrical grid, wifi, public education, public transportation, etc.–saves citizens a lot of money. Good public safety and a robust safety net provide citizens with a sense of security that adds immeasurably to social stability.

I don’t know how to “monetize” the value of public parks, libraries, museums and similar amenities, but not knowing how to value them is not the same thing as saying they have no value.

The question isn’t: how much are we paying in taxes? The tax question is: are we getting our money’s worth?

Like  the Chamber, we need to look to see who is moving where….and not just what the inhabitants of those cities are paying in taxes, but what they are getting for their money.

 

Back Home in Whose Indiana?

Two articles have come across my laptop screen in the past week that reminded me of the old observation that what you see depends on where you sit.

Morton Marcus’ “Eye on the Pie” column stuck basically to statistics, sharing data that suggests our state is not faring well economically. Private sector jobs remain stubbornly below pre-recession levels, despite growth in population; and although wages are up, they aren’t up enough to have kept pace with inflation, so real wages (buying power) actually declined in all but five metropolitan areas.

The result is that the average Hoosier has $30 less a week than she had six years ago.

The job picture is similarly uneven.  Elkhart-Goshen has lost 8.8% or 10,600 jobs; Michigan City-LaPorte is off 4,400 jobs, or 11.2%.

In the Northwest Indiana Times, Rick James focused on the contrast between Indiana lawmakers’ solicitude for business and our abysmal social safety record.  Indiana is 45th among the states in infant mortality–more babies die here before their first birthday than in 44 other states. Public school teachers have been under relentless attack for deficiencies in our education system, despite the fact that our problems are systemic, complex and frequently exacerbated by clueless ideologues at the statehouse.

As James notes,

“Pence can boast about the business climate. He can also talk about the $2 billion the state has in the bank while babies are dying, roads are crumbling and schools are cutting staff and programs because of lack of funding. That, my friends, is Honest to Goodness Indiana.”

The evidence demonstrates rather forcefully that being a low-tax, “right to work” state has failed to create jobs or contribute to prosperity. To the contrary, our obsession with tax-cutting has degraded the quality of life that–according to research–is what actually attracts new businesses and residents.

Meanwhile, our political spin-doctors continue their “happy talk.”

I don’t know what state the administration flacks who issue those glowing media releases live in, but the rest of us would sure appreciate getting directions to that Indiana.

Back Home in Indiana…

If our legislature paid half as much attention to job creation and economic realities as it does to time zones, same-sex marriage and teaching cursive, Indiana’s economy might actually improve, and state agencies might not have to lie about their performance.

If our lawmakers took an honest look at the results of ideologically-driven measures like tax reductions, constitutionalizing the tax caps and “right to work” legislation–we might  encourage the kinds of economic activity that would work for everyone.

Honest to goodness.

Instead, Indiana continues to underperform on a wide range of measures. In a recent column, Morton Marcus highlighted one of those– a significant increase in the gap between the average weekly earnings of a Hoosier worker and that of the average American worker– and he asked a pertinent (and impertinent) question:

 In Dec.’07 that gap was $20.74; by Dec.’13 the gap between Indiana and the nation grew to $58.99 per week. Is this the economic progress our elected legislative and executive leaders travel the world to advance? Is this consistent with those boastful press releases we read about how well Indiana is doing because of our low business taxes and slack regulation?

Elsewhere in the country, it is dawning on elected officials that it is quality of life, not tax rates, that drives relocation decisions. A state that boasts of its “slack regulation” is advertising its resemblance to West Virginia, where  drinking the water has gotten hazardous.  A state touting its low taxes is communicating where its priorities lie; increasingly, when businesses being courted are told “we have low taxes,” they hear “we have substandard education, poorly-maintained roads and parks, and not enough police officers to protect you.” And they’re right.

Amazing as it may seem, people smart enough to run a successful business are smart enough to know that states, like people,  get what we pay for. And back home in Indiana, we aren’t willing to pay for much of anything.

Honest to goodness, Indiana.