All is not well for Indiana’s middle class
By Indiana Senate Democratic Leader Tim Lanane (D-Anderson)
Word Count: 357

According to a report by the credit rating agency Standard & Poor’s, Indiana’s growing income inequality is negatively affecting the state’s tax revenue. My fellow Democrats in the legislature and I have argued that Indiana’s tax policies have done little to improve the status of working, middle-class Hoosiers and this report has further validated our concerns.

Over the course of the last few legislative sessions, we have seen proposals that proponents say are intended to improve business in our state and create jobs. Republican legislators in the General Assembly have focused their priorities on improving Indiana’s business climate by passing the so-called “Right to Work” law and further cutting the state’s corporate tax rates with little proof these policies create the high-paying jobs Hoosiers deserve.

In fact, I would argue that these tax proposals further shift the burden onto middle class Hoosiers. The fact of the matter remains that we are leaving far too many working-class Hoosiers behind.

In 2008 the legislature raised the sales tax rate from 6 percent to 7 percent in order to offset the loss of revenue from property tax caps. Indiana now has the second highest sales taxes in the nation at 7 percent, trailing only California. Sales taxes make up the largest source of revenue for the state, but are tied to consumer spending, something Hoosiers may not be motivated to do when there is this growing income inequality in our state. This is how Indiana’s tax policies are hurting our revenues year after year.

Initiatives such as raising the minimum wage and raising the earned income tax credit have been shown to assist low-income working individuals and families while helping to combat this growing wealth gap. Investing in our children in the form of quality, statewide early-childhood education programs should also be a priority as other states have seen significant returns on their investment of public dollars. It is my hope that during this upcoming budget session, we can develop these innovative and common-sense solutions to this income inequality dilemma. We in the legislature need to focus on more ways to increase these floundering incomes while reinvesting in our citizens.

Sen. Lanane represents Indiana Senate District 25, which includes portions of Madison and Delaware Counties, including the City of Muncie and portions of the City of Anderson. For more information on Sen. Lanane, his legislative agenda or other State Senate business call 1-800-382-9467 or visit www.IN.gov/S25 .

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