A study released last week by the Tax Foundation reported Indiana taxpayers saw one of the sharpest increases in tax burden since 2001. Dig deeper and the numbers are more alarming.
Between 2001 and 2011, Indiana’s annual per capita income slipped by $1,064. What’s worse, Hoosier incomes fell at an accelerating pace. Between 2005 and 2011, per capita income decreased by $1,950. At the same time, the rest of the nation saw a nearly 1 percent increase in income. For comparison, neighboring Kentucky saw per capita incomes grow nearly 1.5 percent while their tax burden declined 1.7 percent.
So while the rest of the country was making progress, Hoosiers saw their paychecks shrink, driving their tax burdens higher by more than 10 percent. It’s no wonder folks are feeling buried.
Declining incomes are at the root of Indiana’s rising tax burdens. When earnings fall, families have less income to cover their taxes, thus raising their tax burden. When families earn more, it takes less of their income to cover taxes, therefore lowering their burden.
The governor and Republican leaders ignored a pressing need to address falling wages this past legislative session, instead, focusing on cutting corporate taxes for the second time in three years. A cut last year in the personal income tax trumpeted by the governor translates into a savings of about $56 annually for the state’s middle income households and won’t take full effect until 2017.
The reality is, even as the state adds jobs, Hoosier incomes remain low. If more people are working, state revenues should grow as a result of more folks earning income and paying taxes. That’s not reflected in recent revenue figures. One possible explanation is an administration settling for low wage, low skill jobs to boast about job creation numbers.
Choices made by the governor and Statehouse Republicans aren’t helping middle class Hoosiers. Shrinking paychecks and potholed streets are quickly becoming the tradeoff for the vision the governor and Republicans leaders have laid out. Roadmap or not, that vision is leading Indiana in the wrong direction.
Sen. Lanane represents Indiana Senate District 25 includes the portions of Madison and Delaware counties, including the City of Muncie and the southeastern portion 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 .