Daniels warns U.S. tax hikes would hurt sluggish economy

2012-11-15T14:46:00Z 2012-11-17T02:07:06Z Daniels warns U.S. tax hikes would hurt sluggish economyDan Carden dan.carden@nwi.com, (317) 637-9078 nwitimes.com
November 15, 2012 2:46 pm  • 

MUNSTER | Despite President Barack Obama's optimistic talk about an improving national economy, Gov. Mitch Daniels isn't convinced things are getting better.

"We need a recovery from this recovery," Daniels said. "It's even weaker than it looks."

The U.S. Department of Labor announced Thursday that first-time unemployment filings jumped 78,000 last week to 439,000, the highest number of new out-of-work Americans since April 2011.

The Republican governor told The Times Editorial Board the latest unemployment numbers don't even count the millions of Americans who have settled for part-time jobs they don't really want or those who have given up looking for work. 

"We need a stronger economy," Daniels said.

Borrowing a page from Republican presidential nominee Mitt Romney, Daniels said the best way to grow the economy is to reduce tax rates. He said closing tax loopholes or capping their use can pay for the tax cuts.

"The goal is more revenue, we've got have more revenue; but the question is how do you get it," Daniels said. "You've got to get more people paying taxes, more people working and earning money and businesses earning money."

The worst thing that could happen, Daniels said, would be for Congress to go along with the Democratic president's plan to raise taxes on wealthy Americans.

Higher tax rates just inspire people to change their behavior and, as a result, don't produce more revenue, he said.

Looking back on his two terms as Indiana's governor, Daniels defended his administration's unmet goal of raising the disposable income of Hoosiers.

The state's per capita income is now 86 percent of the U.S. average compared to 90 percent when Daniels took office. The governor said Indiana's relatively low cost of living makes up for lackluster income growth.

"You don't just flip a switch; it's been going down for years," Daniels said. "We're a low-cost state and we've made it more low-cost, with taxes and all the rest."

He said the continuing decline in American manufacturing jobs has compelled Indiana to rethink what kind of state it is and forced Indiana to become much more competitive.

"Manufacturing, when it was in its heyday, meant that you could have relatively high incomes in Indiana without a great business climate, without the best infrastructure, without a good education system," Daniels said. 

The governor said organizing Indiana around the goal of raising incomes has set the state on a course for future growth.

"That's how we became the best business climate outside the Sunbelt, that's why we walked on coals to do things like Major Moves, that's why we lowered property taxes," Daniels said. "I'd love to see it turn on a dime, but you have to stop the crash dive before you can start climbing."

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