It has been, and indeed continues to be, an interesting journey delving into taxes. But you may need an extra cup of coffee for this one. Lots of numbers.
While we’ve spent perhaps an inordinate amount of time trying to understand property taxes, they are just part of the often confusing way our government funds the services they provide. One of the resources I discovered this past year is an organization simply called “The Tax Foundation.” It is a non-profit working out of the nation’s capital. They present themselves as non-partisan and one would think that if you’re working with just data, that would be easy to do. However, as Mark Twain is credited with observing, “Figures don’t lie, but liars figure.”
At any rate, the group released their latest state-by-state comparisons of tax policies this week. I am not certain what we can learn from these numbers but it is interesting to see how we Hoosiers are doing.
For example, the first data table listed — which can be interpreted as their most basic measuring stick — is “State Tax Collections per Capita.” Indiana has the 18th highest amount at $3,915 per capita. The highest is Vermont (home of Sen. Bernie Sanders) at $6,356 per person; the lowest is Alaska, one of seven states with no state and local income taxes at just $1,438. Texas, another no-income-tax state, is a close second on the low end.
A very similar database labeled “State Revenue per Capita” has some interesting comparisons. This measure includes taxes, fees, licenses and federal revenue. Indiana moves down to 26th place. Delaware is the king here. One might assume that those states with no income taxes would jump up in the rankings. However, Florida, a state with no income taxes, ranks 48th — third lowest — in the tax receipts and the 49th — second lowest — in total receipts.
This seems like a significant stat: “State-Local Tax Burdens as a Percent of Income.” This, I would interpret, represents how burdensome state and local governments are to their constituents’ personal budgets. Hoosiers do OK, coming in as the 14th lowest at utilizing 9.3 percent of their income for government services. Frankly, that still seems high — that more than 9 percent of every dollar we earn goes to the government. It could be worse, you could live in New York and pay almost 16 percent. The best bargain is in Alaska — 4.6 percent.
Indiana state leaders have been working to be a business-friendly state. They’re doing a fairly good job. This ranking combines six categories of business-related taxes. Indiana’s 9th-best overall ranking results from these individual rankings: corporate taxes (11th); state-local income taxes (15th); sales tax (19th); unemployment insurance taxes (27th); and property taxes (2nd). Indiana ranks highest among our Midwestern neighbors. Michigan is competitive in 12th place and Kentucky follows in 18th place. Illinois’ business climate has generally been described as deplorable and Ohio has always appeared to be competitive, but the Buckeyes actually rank just below Illinois in 37th place. The state with the best Business Climate Index, in case you care, is Wyoming. New Jersey is the worst.
Of the 42 reports, this one struck me as one everyone would be interested in: “State Gasoline Tax Rates (cents per gallon)” — a topic at the top of our minds. Indiana’s 51.6 cents per gallon is the 8th-highest in the nation. No surprise to see that California tops the list with 77.26 cents. Our neighbors? Ohio is 17th (38.51¢); Kentucky 34th (26.0¢); Michigan 10th (46.6¢); and Illinois 2nd highest at 65.4 cents, but that number does not include additional amounts in the counties that include Chicago and its suburbs.
And finally, property taxes. One of the stats we eventually focused on is how much homeowners pay as a percentage of their property’s value. Recall that Wells County pays a lower percentage than our neighbors and about eight other counties we researched. How do Hoosiers do in general?
Well, we are below average. In this case, that’s a good thing. New Jersey gets the booby prize again, having the highest percentage at 2.23; Illinois is a close second. Our 30th-place ranking is better than any of our neighbors as well.
We will note here that our state senator — Travis Holdman — instigated a state-level study committee that will delve into the possibility of Indiana joining those other seven with no state income tax. Since the state will need to maintain its revenue levels, where would that money come from? These tax tables may help tell that story. Not sure. After the current session ends and the dust settles, there will be time for some discussion with the senator.
Another journey. Lots of numbers. More coffee.
miller@news-banner.com
