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Mitch Daniels And His Tax Hike

By Max Burns
Jan. 20, 2005

When Indiana Gov. Mitch Daniels campaigned for Indiana to be run “like a business,” no Hoosiers expected it to be Enron he emulated. A week into Daniels’ first term as governor, he has managed to stumble again. This time, Daniels isn’t taking apart unions, but shooting his own party in the foot.

In his January 19th State of the State address, Gov. Daniels – the former Budget Director for President Bush – proposed a “temporary” tax hike of 1% on every household that has a combined income of $100,000 or over. This comes from the man who adamantly swore that a tax increase would be a “last resort” for Hoosiers already strapped with property taxes and falling incomes.

What’s more, Daniels has coupled this tax hike with over $1 billion in new spending – exactly the opposite of the “trimming down of government” that “My Man Mitch” promised on the campaign trail. Somehow, amid $1 billion in spending and a 1% tax hike, Daniels found time to freeze education spending and only provide for about 50% of what state Medicaid requires. That’s quite a balancing act.

According to a flurry of stories on Page A1 of The Indianapolis Star, Daniels stands alone in his view that a tax hike is the best way to get out of the hole Indiana has put itself in. House Republican leader Jeff Espich – the man in charge of deciding whether Daniels’ budget goes before the General Assembly – has flatly declared that there is no reason to hike the tax rate. Maybe reducing spending would help a little.

Both sides of the aisle backed away from this marriage penalty of a tax hike, and for good reason: in many cases, a family that files jointly is just above the $100,000 mark, and thus gets the pleasure of paying the “temporary” tax. Another “temporary” tax, started by Republican Mayor of Indianapolis William Hudnut over a decade and a half ago, still sits on the books. Given the history of state taxes, Daniels’ idea will be all but “temporary” if it is implemented into the final budget.

What Daniels is proposing would place a penalty on those Hoosiers who choose to file tax returns with their spouse instead of individually. It would harm families where both parents are teachers – a profession Daniels has promised to help – and the combined salaries edges up against the $100,000 limit. It would harm the expanding small business society of Indiana, which Daniels also promised to assist in its growth. Dropping a tax on those companies doesn’t seem like a very smart plan.

With his brash and surprising actions against the Unions, $1 billion in extra spending instead of the streamlining Hoosiers were promised, and this marriage penalty of a “temporary” tax hike, Daniels has shown Hoosiers that his views worked out perfectly on the campaign trail, but are falling apart in the Statehouse. Republicans on the Ways and Means Committee have abandoned the Daniels budget, and risk leaving Indiana without a budget and with the General Assembly on a $20,000-a-day special session binge like in 2002.

Daniels’ State of the State came off as a State of Confusion; a grim, stumbling attempt to address the problems of a state he did not come to know before jetting away from Washington D.C. to campaign in and govern. Defying his campaign promises, spending instead of streamlining, and violating his “last resort” have become ‘Problem One’ in the Daniels encyclopedia.

Thinking Hoosiers would be too stupid to notice is now ‘Problem Two.’

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About the author: Max Burns is a 17-year-old Democrat with moderate, centrist ideals. He blames John Kerry's 2004 loss on John Kerry, and is authoring a pamphlet on how to refine the Democratic Party for Victory in 2008 and beyond. For more information, check out The New Democrat. Read the fantasy-fiction novel "Alcardia".



Email: DeMBurns@gmail.com


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