Libertarians deliver the small-government solutions other parties pay lip service to
Indiana’s state government claims to be a pro-taxpayer, business-friendly state.
But when it comes to actually cutting taxes and having lean government, Indiana’s Republican governor is failing Hoosiers.
Gov. Eric Holcomb received a very average grade – a “C” – from the CATO Institute’s annual Fiscal Policy Report Card on America’s Governors, falling right in the middle of the nation’s 50 governors on issues of economic freedom, namely taxes and government spending.
Holcomb and the state’s Republicans like to talk a big game, but the truth lies elsewhere.
According to CATO’s analysis, Holcomb’s administration ranks 16th-worst among state governors in spending, as per-capita spending has risen 9.4% since 2022.
Going back to the beginning of Holcomb’s term in 2017, general fund expenditures will have increased 43% through the end of the current biennial budget in 2025.
Holcomb is failing Hoosiers by spending money on crony capitalist projects – giving $90 million in tax credits and $25 million in property to entice Elanco to move its headquarters 25 miles from Greenfield to Indianapolis, more than $100 million in taxpayer money to an unpopular and controversial project in Lebanon that has one confirmed tenant.
If Indiana is truly a business-friendly environment, its low taxes and educated workforce would attract investment by large companies without needing the government to fork over our hard-earned money to chase “jobs.” The market works when we allow it to.
When it comes to taxes, CATO does give Holcomb credit for reducing the state’s income tax rate to 2.9 percent and giving two taxpayer refunds, but income taxes are only part of the gambit. While we applaud the reduction in income taxes, we understand Hoosiers are paying dearly in other areas.
For example, Hoosiers pay the fifth-highest gas tax in the country, at an average of 51.7 cents per gallon, in part because we are one of the few states that charges sales tax on gasoline purchases on top of the excise tax.
Also, Indiana’s 7% sales tax rate is the nation’s second-highest, only trailing California’s 7.25% sales tax rate. Local governments can and often do impose additional taxes on top of the sales tax, such as Marion County’s 2% food and beverage sales tax.
And while property taxes are levied locally, they rose 17.1% from 2022-23 and another 6.6% the next year, with the governor and legislature doing nothing to stem the tide on homeowners struggling to cover tax bills that are far outpacing the rate of inflation.
Libertarians offer a solution to this high-spending, crony capitalist, high-tax environment. Gubernatorial candidate Donald Rainwater has proposed capping property taxes to 7% of the sale price of the home, either paid all at once at the sale, or 1% of the sale price each year for seven years from the sale.
We also oppose such crony deals as providing state money to private businesses such as the speculative LEAP project in Lebanon, which essentially pushes all risks onto taxpayers while allowing the businesses to collect the profits. Private businesses should be privately-funded. The state should instead be focused on providing a low-tax environment that attracts employers without needing a raft of taxpayer money to entice them.
And we also support eliminating at least one of the two taxes on gasoline, thus ending the double-whammy Hoosiers face every time they fill their gas tanks.
While Republicans talk about small government, they deliver high spending and higher-than-needed taxes.
Libertarians will return government to the people, lower your taxes, cut unnecessary state spending. We won’t settle for a “C.” We’ll give taxpayers an “A+.”
In Liberty
Evan McMahon
Chair, Libertarian Party of Indiana