With the state of Indiana reporting the largest budget surplus in history, Hoosiers should be able to keep more of what they earn. That’s why I have proposed a permanent 10 percent, across-the-board cut in the state’s personal income tax rate.
As governor, I am just as concerned about the family budget of every Hoosier household as I am about the state government’s budget.
When it comes to excess government revenue, it’s not a question of whether the money will be spent; it’s who is best suited to spend it.
I will always believe that the people of Indiana will spend their own hard-earned dollars more productively than any agency of government.
Our administration’s budget is balanced and responsible, and it makes Indiana’s fiscal health a top priority.
Our budget increases our reserves from the current level of $2 billion. It holds the line on spending while prioritizing key investments in education, workforce and infrastructure. And our budget lets hardworking Hoosiers keep more of what they earn.
Thanks to the fiscal stewardship of the Daniels administration and the leadership of the Indiana General Assembly, today our state government is able to fund our priorities, protect our reserves and still have more than enough room to enact the tax relief that Hoosiers deserve.
Lowering the income tax is the best way to help the most people. While corporate tax relief would benefit 17 percent of our businesses and estate tax relief would benefit 5,000 estates, 83 percent of businesses and 4.4 million middle class taxpayers would benefit under my tax plan.
Many things written about my proposal to reduce income taxes by 10 percent have focused on whether our state government can afford to cut taxes for Hoosiers. My budget clearly shows that we can afford it.
Given the daily competition among states for jobs, the real question is whether we can afford not to cut taxes.
Indiana’s economy is still struggling. Unemployment is stubbornly above 8 percent, and our economy needs a boost. We need a competitive edge against other states and nations. My tax cut is part of a comprehensive plan to accomplish both.
Some have asserted that income tax relief is unnecessary for economic growth, but the evidence suggests otherwise. Lower taxes will mean more jobs, and 27 states already have a lighter tax burden than Indiana. States with tax climates more favorable than ours are experiencing GDP growth well above the national average. They disproportionately lead the nation in population growth as they scoop up talent and investment that should be moving to Indiana – but aren’t.
Our tax cut is fiscally prudent. Our budget looks beyond the state’s two-year budget cycle and is based on the idea that spending should be sustainable and protect our reserves. In my budget, spending is more than a full point below inflation and reserves increase to $2.3 billion – even while giving millions of Hoosiers a tax break.
By way of comparison, the recently passed House budget would reduce our reserves to $1.85 billion at the end of fiscal year 2014 and grow them back up to more than $2 billion in fiscal year 2015 – with no new tax relief for Hoosiers.
The reserves in my budget are greater than the entire revenue decline we suffered in 2008-09 when Indiana weathered the worst recession since the 1930s. Our goal must be to protect Hoosiers against future downturns while giving them the break they need right now. The feast-or-famine problem with the state budget is not an unavoidable economic cycle. It is an outcome we can prevent by continuing to practice the fiscal discipline that has become a hallmark in Indiana.
In accepting this job, I promised to be the governor of all the people of Indiana. Across-the-board income tax relief is the best way to lessen the burden of taxes on all Hoosiers, strengthen our economy and protect our state’s fiscal health.
As the debate over our budget continues, I look forward to working with Senate President Pro Tem David Long, House Speaker Brian Bosma and all the good men and women of the Indiana General Assembly. I am confident that together we will produce a fiscally sound budget that funds our priorities and offers the kind of tax relief Hoosiers need and deserve.