AFL-CIO policy has historically called for tax fairness based on the ability to pay and opposed regressive reform proposals. True tax reform must take into account historical trends of those who share the total tax burden. When there is one segment shouldering an unequal tax burden, then reform must fairly and equitably adjust that burden.
We know that Indiana is a low tax state. But, the legacy of tax shifts and an unequal tax burden continue to demonstrate that tax fairness doesn't exist in Indiana. The politicians calling for Inventory tax cuts regardless of the size of the cuts are compounding that continuing shift of more tax burden onto the individual. Now they want to compound the problem even more by increasing the state income tax without even considering a truly graduated system.
Any increase in the income tax should NOT be implemented on Individuals earning less than $85,000 and Joint filers earning less than $125,000.
The problem of tax inequalities among individuals is compounded by the fact that businesses are paying a decreasing percentage of state tax revenues.
The share of income tax revenue paid by individuals rose from 24 percent in 1977 to approximately 36 percent in 1997. The share of corporate income taxes paid in Indiana declined over the same period from 19 percent to just over 10 percent.
Like income taxes, the share of property taxes paid by businesses also has declined. In 1977, residential and individual taxpayers paid 30 percent of the total property tax bill. By 1997, this share had risen to 39 percent. [Data on income and property taxes drawn from Indiana Legislative Services Agency, Handbook of Taxes, Revenues and Appropriations, various years.]
Our tax system, already weighted in favor of business, provides additional relief in the form of economic development subsidies. Although stagnant wage growth and job losses in recent years raise accountability questions, direct business subsidies continue to rise and tax shifts to individuals are growing. Corporate Tax Abatements in 1999, payable in 2000 amounted to OVER 1 BILLION DOLLARS. The state also provided businesses training subsidies worth millions in 2000.
Economic competitiveness is the buzzword for many of Indiana's tax reduction/reform proposals (e.g., the permanent elimination of the local property tax on business inventories). The translation means lower taxes for business and higher taxes for individuals and households in their capacities as consumers or income recipients.
Any type of tax cuts/restructuring for so called economic development must include total public accountability with claw backs tied to new jobs created at or above a livable family wage which ensures the workers won't qualify for additional tax funded subsidies, and if a company downsizes, closes or moves out of state after receiving any tax incentive they must pay back a proportional amount of the tax break based on the number of workers terminated. Additionally, any restructuring should increase Unemployment Insurance benefits using the one hundred and seventy-four million dollars of Reed Act Funds just distributed to the state.
An ever-increasing tax burden is the price working families are paying for a friendly business climate. The policy debate in Indiana serves as a reminder that tax laws are made on the basis of political power, not fairness or economic efficiency. Without a consideration of who can afford to pay taxes, proposed legislation represents little more than business as usual in Indiana.
What this state should do is make everyone share in this equally. On the last two tax increases in the 1980's it was the individuals that shouldered more of the burden through tax shifts to promote economic development. Those shifts didn't create the jobs the people in charge of tax policy claimed they would. We did see many large mergers, shifting of work to other states and countries, along with many facilities shutting down. Just look to cities like Bloomington, Anderson, Marion and Muncie for examples. Rather than add more of a shift, creating a tax policy that is (LESS)---FAIR, UNIFORM and JUST, why don't we try something different. At the very least, temporarily stop a large number of the tax cuts, credits, incentives and many other forms of corporate welfare programs that has gotten the tax system so out of balance, until we can be fairly certain what is going to happen with our economy in general. This way we would ALL share somewhat equally in the problem.
The Indiana AFL-CIO calls upon all Legislators and Citizens to only consider Tax Reform & Restructuring proposals that are FAIR, UNIFORM AND JUST for all Indiana's citizens. To do anything less will only compound the tax inequalities of “Working Families” in the district you have been elected to represent
At our December 2001 Convention the Indiana State AFL-CIO adopted without one dissenting vote from the Delegates representing all the affiliate unions of the Indiana AFL-CIO, a Resolution numbered (12-B) containing the following 18 issues pertaining to the Indiana General Assembly Legislative Issue on Indiana Taxes.
- Oppose any and all attempts to restructure the state tax laws that is not FAIR, UNIFORM and JUST and shifts more of the tax burden to Indiana's Working Families by, increasing the income tax on individuals under $85,000 income and $125,000 for couples.
- Increase the state sales tax revenue by applying it to more of the services that are not currently taxed and include language in the law to ensure a full tax credit applied to the state income tax for individuals earning $85,000 or less and Couples earning $125,000 or less in taxable income, for Legal, Medical and Auto Repair Services.
- Oppose any attempts to (NOT) tax Corporate Gross Income.
- Oppose all types of corporate tax credits or reductions without full publicly available taxpayer accountability proving that such welfare will actually benefit the taxing district, and create or maintain good paying jobs with employer paid benefits for health and pensions.
- Support maintaining the Property Tax Replacement Credit for individual taxpayers and eliminating it for Corporations. Support a 50% Homestead Mortgage exemption for those that own and live in homes with an assed market value under $275,000 and eliminate the exemption completely for homes over $275,00.
- Oppose eliminating the inventory tax.
- Oppose creating a new investment tax credit.
- Insure that local governments and school districts can continue with construction projects.
- Allow state employees to receive scheduled and negotiated pay increases in a timely manner.
- Allow for departments of government to increase or replace the workforce needed to operate in a quality fashion.
- Remove the hold on the 16 construction projects previously approved, and insure that these projects which were cancelled or put on hold get immediately placed back into the pipeline and sufficient funding for safe construction be instituted.
- Insure that universities have sufficient funding and authority for an aggressive capital projects program.
- Insure that highway construction on a state level be funded at least equal to a level of the past 5 years.
- Raise revenues through an increase in gas tax, not to exceed ten cents over three years, for highway funding.
- Expand casino gaming to dockside, French Lick and other appropriate sites.
- Create construction jobs through solid economic development policies with taxpayer accountability.
- Generate revenues for the current budget shortfalls through taxes on gaming, cigarettes and the enactment of a state run Fair Drug Pricing law with any excess revenues generated going into the state general fund.
- Protect the property tax base of local governments so they can fund local projects.
As a practical matter NO ONE in the political arena at either the state or federal level, is speaking effectively for working people on the issue of tax fairness. The working class remains an undiscovered lost continent afloat in corporate muck sanitized with the word “democracy”. Ancient Greeks invented the word. Look it up in the dictionary and you will find two words (one meaning “people”, the other meaning “to rule”), resulting in the word democratia which literally means “ the people rule”. This state, country and much of the world have watched Democracy being diminished. Vast numbers of people now believe we are ruled by “oligarchy”(rule by the few) and “plutocracy”(rule by the rich).
The relevant policy question is: What is to be gained by moving to a new tax system that shifts more of the burden to individuals and is it worth the political capital and transition cost that accompany a major UNFAIR tax restructuring ? We have provided more and more corporate welfare over the last 25 years. Are the recipients of this welfare employing more or fewer people than they did 25 years ago? |
