2014 Legislative Session in review: “The dog caught the car.”

INDIANAPOLIS – The Indiana Manufacturers Association recently requested that Indiana House Democratic Leader Scott Pelath of Michigan City write a post-2014 session analysis of the tax legislation from the House Democrats’ perspective.

The column Leader Pelath submitted is found below and I wanted to share it with you:

Is the dog victorious when he catches the car? If so, congratulations are in order to this year’s corporate tax cut winners.

Look, everyone loves a tax cut. Accountants will be happy to add them to the balance sheets that get passed around board meetings. And I am happy for anyone who gets news of lower taxes. Dinner will taste better that evening.

But in terms of solving Indiana’s real problems, our state once again has veered badly off course. Already boasting of one of the nation’s best business tax environments, we remain oblivious to the most glaring limitations on our prosperity: the skills of our workforce, the health of our people, and the badly flagging incomes of Hoosier consumers.

I know, I know. Indiana’s ideologues will preach that all these problems will fix themselves if government will simply shrink away. But to the pragmatic problem solvers that comprise most of our citizens, the results already speak for themselves. We have been cutting business taxes for over a decade, and the plight of the average Hoosier—your workers and customers—keeps getting worse.

Can the public sector cure the weakening fundamentals of our state’s economy? Of course not, and no serious person argues so.

But it is equally indefensible to assert that our institutions don’t have a role in upgrading workers’ skills. Or in reversing embarrassing health indicators like one of America’s highest infant mortality rates. Or scaling back barriers to growth in disposable consumer income.

We can do better, but somewhere along the way, our state’s leaders decided to stop trying. In the pursuit of economic prosperity for a chosen few, we are slowly depriving hundreds of thousands of Hoosiers of any chance for success.

Just last week, the conservative-leaning Tax Foundation reported that over the past decade, individual Hoosiers are bearing more and more of the tax burden while corporate tax revenues continue to pay less and less. But what have workers and consumers gotten in return for picking up the tab? Not much. In 2002, Indiana’s average household income exceeded $53,000. More than a decade later, it’s a hair under $47,000. Blame President Obama all you want, but Indiana’s income “growth” is one of the nation’s worst. And those are the people who are supposed to be buying our stuff.

The skills of our employees have deteriorated at the same time. Nearly 30 percent of Americans have finished college. Less than 23 percent of Hoosiers have.

Our health factors, which correlate in lockstep with income and education statistics, are perhaps the most worrisome. Our infant mortality rate is among the worst in the nation. Nearly a quarter of our grown-ups still smoke. Since many parents are able to afford only cheap, high-calorie food, 14 percent of kids between the ages of two and five are obese. Those are our future workers.

So corporate tax rates keep looking better. At the same time, our people are bearing more of the tax burden, earning lower wages, suffering deterioration of their work skills, and remaining unhealthy and less able to work.

Furthermore, we continue to ignore our responsibility to provide a public response to these problems. Expansion of affordable health care to 300,000 uninsured Hoosiers is deemed too costly, so we send our own federal tax dollars to pay for health insurance for Kentuckians and other fellow Americans. Traditional public schools—where most of our kids still go—see funds gleefully slashed in response to self-induced revenue decreases.

Ideas for cutting taxes to retain our best and brightest in Science, Technology, Engineering, and Mathematics are shunted aside without consideration.

Indiana can do better. It must do better. And getting more money in the hands of the people who already have it is a failing strategy.

In the 2014 legislative session, the dog caught the car. It’s time to start nursing the poor boy back to health.