Increased taxes result in decreased approval rating for governor
Is Indiana Gov. Mitch Daniels riding the president's coat tails down a slippery slope? Nope. Daniels is making his own errors, thank you. And I suspect the governor’s dismal approval rating can be attributed to higher taxes; specifically, property taxes.
First, let’s look at the governor’s approval rating, or the lack thereof.SurveyUSA reports that only 44 percent of Hoosiers say they approve of the job Mitch Daniels is doing as governor. While that’s five points higher than the president’s approval rating, Daniels trails behind twenty one of the other twenty eight Republican governors. In addition, more than a third — 36 percent — of Hoosier Republicans do not approve of the governor’s job performance.
Of those identifying themselves as politically conservative, the governor received a mere 58 percent approval rating. Other demographics reveal the governor is trailing among all age groups, both sexes and those who have attended college. Both blacks and white don’t like the way the governor is managing the state. Only 45 percent of white Hoosiers and 27 percent of blacks give the governor a thumbs up. (Surprisingly, Daniels highest approval rating is among hispanics at 75 percent.)
Conclusion?
Considering the governor's agenda includes capping property tax relief, as imposed by Gov. Otis "Doc" Bowen in the 1970s, the disapproval rating is understandable.
Here’s why.
• Hoosiers disapprove of Daniel’s decision to transfer the property tax burden to local governments. They know it will lead to a increased tax rates.
A 1973 law limited the amount local and county governments could raise through property taxes. As long as they stayed within their limits, the state would provide subsidies equaling 20 percent. By capping the property tax subsidies, the governor is giving local and county governments the green light to gouge property owners as they did prior to the Bowen administration. It’s good for the state budget, but potentially devastating for the family budgets.
Granted, the governor’s decision will help alleviate the state’s $600 deficit inherited from Gov. Joe Kernan’s administration. But increasing the burden on property owners is hardly the most effective solution.
• Higher property taxes will result in decreased taxable income. That, in turn, will reduce the cash flow from taxpayers to the state’s coffers. Hoosiers will be paying more in taxes with less going to the state. While the governor is filling a $600 million pothole by removing the subsidies, he is simultaneously digging another deficit by reducing income tax revenue, the lifeblood of the state’s budget.
While the inflow of tax dollars to the state will dwindle, county bureaucrats, politicians and cronies will be floating bonds to construct gaudy school buildings, garish county structures and new jails worthy of a higher class of criminals. Because property owners will be stuck with bond payments for generations to come, the prospect of rescinding the increased taxes will be non-existent.
• Increased property taxes will discourage investment in Indiana. When Cummins Engine Company moved 500 jobs from Columbus, Indiana to New York, it was to take advantage of decreased business costs. When looking for a locale to build factories, business leaders first look at their bottom line. And tax abatements will do little to soften the blow. They will simply increase the tax burden even more on home owners and small businesses.
• Hoosiers remember the recent sales tax increase. The added money was needed, we were told, to fill the gap caused by government excess. With increased property taxes looming on the horizon, Hoosiers mindful of a 6 percent sales tax rate can hardly be expected to give the governor their voice of approval.
• Add the beverage tax afforded to Indiana counties to increased sales and property taxes. One can fully understand why Hoosiers are discontent. And there’s more. While the governor is removing property tax relief, he is increasing entitlements to help pay home heating bills. In reality, the entitlements go to the utility companies. And Hoosiers know it.
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Kenn Gividen was the Libertarian Party's candidate for governor in 2004.