Solution to Indiana's Tax and money issues
The Indiana Money Drain
Many politicians often talk about the problem of the brain drain in
Indiana. I believe they are failing to see the root of the problem.
When graduates go looking for a new job they follow the money trail,
and in Indiana this leads out. We have a serious problem right now in
our state, we have more money leaving the state then coming in. Every
year big corporations take more expendable income right out of the
state, and our tax system currently supports this. Wal-Mart pays less
tax on the money that they take out of the state then we do on what we
make, spend, and own. We need to tax the big businesses that are
sending our money away, and lower our sales tax.
There are three ways we are taxed locally, each targets or favors a
specific group. We have a much-disputed property tax, an income tax and
sales tax. The sales tax falls flatly on the consumer, if you go to
spend money you will pay it. That leaves the service industry and big
corporations out, they pay none of this type. Then we have the property
tax, which seems like it should even things out until we look at it
more. Ignoring other problems like the over use of tax abatements and
deep discounts, big corporations still are not taking much of a hit
here. Consider the example of a McDonalds in a mixed residential area.
A house next door may pay $2000 in taxes a year, now even if the
McDonald’s is paying four times as much, it is only paying $8000.
You may think that is a lot until you think about the amount of money
that goes though their doors or as profit. The person in the house may
make $30,000, where as the McDonalds maybe making $500,000 a year, of
that 12.5% goes to the McDonalds cooperation. So of that money in hand
the homeowner is paying 6% and the business is only paying 1.6% and
12.5% leaves the state. Taxing property value can only go so far, the
real value of the McDonalds is the business not the property. So
property tax does not really catch any of the money leaving the state.
The third tax, income tax, should be the great equalizer. Unfortunately
it currently is not due to how small it is to businesses and the breaks
they get.
The solution to stopping the massive money
hemorrhaging we have to other states is to cut the bleeding and
encourage locally owned businesses that put money back into the
community. We can do this though tax reform. We need to lower the sales
tax by at least 1%. This for one will encourage spending and two
increases the amount of extra income our residences have. This also and
more importantly will give local businesses a competing chance with the
Internet. Right now, if you shop in Indiana you will be punished with a
6% tax. Look at the example of a local computer store. If you were to
buy a new $1000 computer you would have to pay an extra $60. If you buy
that same computer on ebay you don’t have to pay taxes at all. We
need to encourage spending and take the tax load OFF the consumer.
Locally owned businesses will appreciate this because it will help them
make more sales. Now in order to do this, we need to raise the income
tax. Right now it is relatively low, if we remove all the discounts and
abatements that businesses have now, then they will pay there fair
share also. If we simply raise income taxes across the board by 1% in
this situation, we will have more money then before even with the sales
tax decreases. As for our person making $30,000 a year, they will
only pay $300 more. Yet the big money makers will now have to pay,
where as before with sales tax, only the consumer had to pay. This will
skim some of the profits leaving the state back into our local
governments. At first you might think business would be upset, but
really they could stand to make more money from the decreased sales
tax. You also have to remember this tax is on profit of the business.
That means if a Wal-Mart makes a ¼ of a million profit of a
community, it should pay its fair share of income taxes also. If they
have a good year, they will have to pay more, if not, they will pay
less. This will not discourage growth or development in the business
sector.
If we want to fix our governments money problems we
need to fix what is wrong with our tax system. We need to tax the big
businesses that are sending our money away, and lower our sales
tax.
Andy T. Evans