CROWN POINT | With his often sarcastic and witty speaking style, retired economist Morton J. Marcus on Friday criticized Indiana Gov. Mike Pence’s proposed plan to eliminate the state's personal property tax, which is levied on business equipment.
Marcus, a Times Business columnist, was the guest speaker at First Financial Bank’s quarterly morning business meeting, which was attended by dozens of local professionals.
“We have a governor who believes that if you cut business taxes, they will invest,” Marcus said.
Marcus said the idea that by putting more money into the hands of businesses will cause them to invest more in the state is “not necessarily true.”
“They have to see a return on that investment that makes it worthwhile,” Marcus said.
Marcus said the only investment the businesses likely will make with the extra money is increasing their executive’s compensation.
“Businesses will save about a billion dollars in taxes, and then that will be shifted to the homeowners and other businesses without much personal property,” Marcus said.
Marcus said the state also wants to reduce the corporate income tax.
“Again that raises the question of what would businesses do with that money, given that there are so many businesses that are owned by businesses that operate throughout the world,” Marcus said. “There is little indication that the businesses would necessarily invest that money in the state of Indiana. The economic policy of the governor, of the legislature, is – to be kind – brittle. It does not have the solid ground for improving the economy of the state of Indiana.”
To improve Indiana’s economy, Marcus said, the state needs to help businesses grow through the use of updated technology and equipment and to have its schools turn out trained employable people with marketable skills and a good work ethic.
Nationally, Marcus said 2014 is basically the same economy as the past five years with the exception of the stock market, which he does not expect to sustain its recent high levels.
Marcus said demographics are also holding the economy back.
“We do not have enough households being formed relative to the number of households that have basically withdrawn from the market,” Marcus said. “When you reach my age, and the age of many of the people here in the audience, you are just not out buying new items.”
Marcus said it will take an economy with a growing middle class, work force and population to get the kind of economic growth to which the country has become accustomed.
“I think that what we will see is some of the recent highs we have seen in housing construction, in automobile sales and such will taper off and flatten out and maybe even decline a little bit this year,” Marcus said. “Last year was a big case of catching up for many people. We just do not have strong consumer demand.”