Sales tax increase

Lindsey Ziliak, writing for the Evansville Courier Press has an article entitled “State sales tax going up next week.” The sales tax is increasing from 6 cents per dollar to 7 cents per dollar. She denominates this as a “1% increase.” If there are any statisticians out there, I’d like to know if the size of the sales tax increase is more properly designated as a 16% increase. The size of the tax will be 1/6th larger than it was previously, hence, an increase of 16.66%.

Half-Assing Schools: A Fine Hoosier Tradition

Deanna Martin, writing for the Associated Press, has an article entitled “Schools worried about impact of property tax plan.” In the name of reducing property taxes and in addition to shifting the tax burden to payers of the sales tax, under the General Assembly’s new tax plan, schools will receive $90 million less in funding. To hear Gov. Daniels and state lawmakers tell it, of course, our schools are profligate wasters of money.

But, the fact is, Hoosier commitment to funding its schools has traditionally been pretty tenuous. Initially, the state didn’t fund public schools. Then, when the intent was there, we got into the whole public improvement – canal/highway/railroad debacle. That wrecked the State’s finances for awhile. Then the Civil War gummed things up for awhile. I don’t think we really got a public primary school system going in earnest until the second half of the 19th century. We pay our teachers only grudgingly and give them the same level of respect we give social workers everywhere; which is to say, next to none.

You reap what you sow. Hopefully we won’t be so enamored of short term savings that we ignore long term development.

Gambling expands to bars

The Courier Press reports on Gov. Daniels signing into law HB 1153 which allows bars to offer some kinds of gambling, including pull-tabs, punch boards, and tip boards. The sale of the boards can’t exceed $1.00 and, if I’m reading it right, the maximum payout on a game is $599.

It’s looking more and more like we should do an overhaul of our approach to gambling. It seems to be a bit of an irrational hodge-podge. I think this arises out of our attempts to kid ourselves that we aren’t really a gambling state. Returning to a quip I use far too much, we’ve now established what we are and are merely haggling over the price — lottery, gambling boats, gambling in bars — I don’t think lawmakers can really pretend that Indiana, as a rule, is anti-gambling. At this point, I think we either need to do the hard things we need to do to return to being an anti-gambling state (which we won’t because we’re addicted to gambling tax revenue as a substitute for more direct taxation) or we can come up with a more rational, comprehensive gambling regime.

Property tax fallout

The Journal & Courier has an article on some of the fallout from the property tax legislation; namely the reduction in funds for schools. Crawfordsville schools will receive $1 million less in funding. In Delphi, they’re looking at a 21% reductionin the budget. Frankfort’s schools will receive $780,000 less, about a 12% reduction. This quote struck me as local government finance in a nutshell:

Bill Hasser, a Delphi resident, said he is happy to see property tax relief but doesn’t want to see cuts result from it, especially in the schools.

Tax restructuring passed

The General Assembly passed the tax restructuring bill. It increases sales taxes and will likely have the effect of increasing local option income taxes in return for a reduction in property taxes. The sales tax will increase 16.6% (from $0.06 per dollar to $0.07 per dollar). Property taxes will be capped at 1% of the property’s value for owner-occupied residential property; 2% for rental properties; and 3% for business properties. Funding for schools and local government will likely be decreased to a level that forces those entities to pass local option income taxes.

Property Taxes: Cui Bono

Lesley Stedman Weidenbener has an article in the Louisville Courier Journal analyzing the property tax restructuring plan being considered by the General Assembly. According to Everybody’s Favorite Economist ™, Larry DeBoer, “The savings would be greatest among people who are “income poor and property rich,” a group that tends to include retired households.” The median household with an income of about $52k and a house worth about $121k would experience an overall tax savings of about $145 assuming that their county does not increase the local income tax; probably an unrealistic assumption in many locations.

Renters are losers under most variations of the plans because they don’t enjoy the property tax savings but they still pay the sales tax. Under provisions inserted by the House to assist low income Hoosiers, such renters break even if they make less than $25,000 per year.

People who are income rich and property poor will be the biggest losers.

It looks a little like we’re preferring people who are living beyond their means and penalizing people who haven’t over-committed on real estate relative to their resources. Certainly mid-income and high income renters are getting screwed.

The New Whigs

Brian Howey has a column entitled Will GOP become Whigs of the 21st Century? The premise of the question is that Republicans might be stumbling down the road to political extinction due to their position on immigration. Their rhetoric on illegal immigration is alienating Hispanics who are here legally.

I do have to comment that Sen. Delph’s rhetoric comes across a little better than it has in the past. Reports earlier in the season basically had Sen. Delph saying “rule of law” like a mantra.

The senator points to a recent case in Hendricks County where 20 people were found stuffed in a van “like cattle.” He charges that El Indy Latino is profiting from such people. He understands the opposition from the Latino community, but asks, “If you’ve got a better solution, I’m all ears. The community as a whole cannot be accomplices to law breaking because they create racial tensions and suspicions over legal citizens.”

The effect of illegal immigrants on Hispanics here legally might be a compelling angle from which to debate the subject. Of course, that limits your ability to credibly put forward solutions that will disproportionately burden those citizens.

Whatever the intent of individual GOP lawmakers, they have a particular problem because of one of their constituencies. I don’t think I’m assuming too much by suggesting that white men who are unhappy that their traditional position in our society has been eroded by the advancement of women and minorities cast a non-trivial number of Republican votes. That makes it easier for Republican lawmakers to appear hostile or at least unsympathetic to minorities.

And that’s a political problem as the demographics of the United States change:

Pew Research released a report recently that shows the American population will increase from 296 million in 2005 to 438 million in 2050. “Of the 117 million people added … 67 million will be the immigrants themselves and 50 million will be their U.S.-born children or grandchildren. And 29 percent of the U.S. population in 2050 will be Latino, compared to the current 15 percent. Factor in African-Americans, Asians, and others nationalities, Caucasian Americans are predicted to become a minority population.

Now here’s where my 21st Century Whig comment comes into play. The Pew Hispanic Center notes that 57 percent of registered Latino voters now call themselves Democrats, while just 23 percent call themselves Republicans. There is now a 34-percent gap in partisan affiliation among Latinos and it’s growing. That’s going to be a Grand Old Problem.

Pipe down and go back to your conference rooms

Niki Kelly reports on a Democratic property tax relief plan. This comes close on the heels of an earlier Republican press conference on property taxes. Look, at this point, it’s nice that you guys have plans; but, frankly, we’re not the ones you need to be talking to. That part of the process has come and gone. You have to hammer out agreements with your fellow lawmakers. So, enough with the press conferences. Republicans want to make sure lots of property taxes get shifted to other places. Democrats are less ambitious and want to focus on reducing residential property taxes and don’t seem to concerned about non-residential properties; they also say that the Republicans have proposed a plan the State can’t afford. All of these are fine issues for discussion – amongst yourselves. Enough with the negotiation by press conference

RIP Sen. Ford

Via Fort Wayne Observed, Sen. David Ford has died.

According to his Statehouse office, Ford died early this morning at home from complications related to pancreatic cancer. He was 59.

Ford had been receiving hospice care and chemotherapy following hospitalization for what appeared to be flu-like symptoms in mid January.

Rest in Peace, Senator.