The same study shows that almost 60 percent of all employees in Indiana work for small businesses. And, according to the Small Business Administration, small businesses create two-thirds of the net new jobs, jobs that Indiana so desperately needs. Small business is the foundation on which Indiana’s economy rests and the best way to boost small business is to cut the income tax.
|Barabara Quandt of the NFIB with Speaker Brian Bosma|
Gov. Mike Pence has proposed a 10-percent cut in the state income tax as a way to spark the economy and create jobs. It’s an aggressive proposal, but a smart one. While Indiana ranks among the top states in America for its business tax climate, it doesn’t have a low tax burden. Moreover, the competition isn’t sitting still.
Michigan slashed its business taxes last year and adopted “right to work.” Wisconsin cut taxes and passed tort reform. Iowa is finally dealing with its property tax problem, which will make it more attractive in the region. A growing number of governors, including Louisiana’s Bobby Jindal and North Carolina’s Pat McCrory, are talking seriously about eliminating income taxes altogether.
In Texas, which has no income tax and where the economy has been booming, Gov. Rick Perry recently proposed a constitutional amendment that would return surplus money to the taxpayers. Florida, also with no income tax and a lower corporate tax than Indiana, has been drawing Hoosiers for years. In fact, according to the Tax Foundation, almost 20,000 income tax filers in Indiana relocated to Florida between 2000 and 2010. They took with them more than $2 billion in adjusted gross income, money that is now circulating in the Florida economy instead of ours.
The migration of Americans to low-tax states, evident in the Census data, makes it clear that money is mobile and it goes where it’s welcomed. Small business owners in Indiana are pleased with the progress made by legislative leaders and former Gov. Mitch Daniels. But we shouldn’t rest on our accomplishments.
Beyond that, the governor’s budget, which anticipates the tax cut, also projects a surplus. That should be encouraging to folks in the General Assembly who are properly concerned about fiscal integrity. The question of whether Indiana can afford a tax cut is really upside-down. A better question is whether taxpayers who keep more of their own money will spend it better than the state. Small businesses owners certainly would.
Cutting income taxes would allow most of the employers in Indiana to plow that money back into their businesses. They’ll buy new equipment, make capital improvements and hire new employees. And all of that will generate more revenue for the state to provide basic services.
The National Federation of Independent Business represents nearly 15,000 small business owners in Indiana, and they strongly support the governor’s plan to cut income taxes. Legislative leaders in recent years have undertaken numerous reforms to make Indiana much more competitive. We would urge them to keep up the good work and support the governor’s plan to reduce the income tax.
Quandt is Indiana state director for the National Federation of Independent Business.