FORT WAYNE, Ind. (WANE) — If Indiana were to start its tax code with a blank slate, what would result?
That was the thought behind Senate Bill 3, authored by State Senator Travis Holdman (R, Markle).
“Nobody can remember when they studied this last,” Holdman told WANE 15 Thursday.
If passed, the bill would create a Blue Ribbon Commission to examine property tax, individual income tax, corporate tax, local income tax and “the whole spectrum of taxation in the state of Indiana.”
In December, Holdman attended a taxation conference in California (“of all places”) and could see a race among conservative states to reduce or fully eliminate individual income taxes, which he said seven states have done.
Those states seem to attract a growing workforce, although much more than taxes might be a factor.
And how would Indiana make up the $7 billion or more those taxes generate each year?
One option could be a sales tax on services, from a haircut or lawn care to legal work or accounting. Holdman would insist food and medical services remain tax free.
Critics often say a sales tax is regressive because it takes a higher percentage of income from the poor than the rich. If food and medical were not taxed, Holdman thought, the tax would be more even.
“The more income you have, the more you spend, typically, and to some degree that equalizes itself out and becomes a fair measure. If you consume, you paid to consume.”
Ball State economist Dr. Michael Hicks told the Indiana Capital Chronicle that workers aren’t choosing low tax states, but those that “have nationally competitive schools, that have quality of life things … It’s really about public services.”
Still, Holdman was encouraged by lawmakers’ response to his bill, with many telling him the study was long overdue.
In its current language, the study would spend no tax dollars, which Holdman said might eliminate some of the enthusiasm to be named to the panel.
“We’ll just see how dedicated people are to the task if we just don’t pay them and they’re doing it on their own time and their own expense.”