Tax Restructuring an Important Component of Fiscal Renewal

The Indianapolis Star editorial No new taxes: It's that simple gets it wrong. The editorial claims

One of the first things Mitch Roob made clear in his new job as Indiana's economic development director is that the state doesn't plan to raise taxes, despite a sour revenue forecast. He was echoing the sentiments of his boss, Gov. Mitch Daniels, who understands that tax increases are counterproductive in a recession.

The editorial points out Governor Daniels attempted at other times to raise taxes on wealthier Hoosiers. It also details some ways that other governors are attempting to increase revenues.

However, without any explanation or discussion of the underlying thinking behind the claim, the editorial concludes that

Tax increases have the opposite effect, diverting money from individuals to governments, which is a particularly bad idea in a recession.

There is no basis for this conclusion. The role of State and Federal government in a fiscal crisis of this magnitude is to help those in need, provide all the services required for working families and the disabled to meet their needs, and to support federal initiatives to kick-start the economy. While some politicians, including Governor Daniels, may be ideologically adverse to accepting this responsibility and helping working people, its time they set aside their ideological blinders and looked at the realities of life for large numbers of Hoosiers.

As detailed in other posts to this blog, poverty and near poverty are rampant in Indiana. Vasts numbers of children live in families that are having a very hard time keeping it together. There is a hugely disproportionate distribution of wealth. There is no way out of the current fiscal crisis without some redistribution of wealth from the very rich to meet the needs of the impoverished and working people. New, highly targeted, taxes are the best and fastest way to achieve that goal in the current situation.

The Indianapolis Star editorial, and possibly Governor Daniels, may wish that the mantra of "No New Taxes" would be accepted as obvious on the face of it, but they would be wrong. The regressive methods that the editorial details to scare people, as in the mistaken efforts by New York Governor Paterson in raising fees and use taxes that disproportionately impact the poor and working families, are inappropriate responses to the current crisis. Regressive efforts to respond to the fiscal crisis will just prolong that crisis by making it harder for the majority of people to function economically. The only way to raise the funds needed is a highly progressive taxation structure that disproportionately impacts the very rich. This country, and the state of Indiana, needs to set aside concepts of taxation equality or "taxes are bad" or "no new taxes" and start talking about redistributing wealth away from the top 1% of the US population which has so disproportionately benefited from the economic activity of the last thirty years, and applying it to meet the needs of the majority of Hoosiers.

Its time to insist that State government do more than provide lip service to meeting the needs of the working poor. The statistics show that there are too many poor and hungry living in our State. Let's look to Robin Hood as a role model, and work for a more equal distribution of the wealth as the only way to meet the needs of the working, disabled, hungry, and impoverished children and adults who are the majority of Hoosiers.