Will federal tax cuts help the economy and put more money in the pockets of Hoosiers? Indications from the measure signed into law in December are a resounding yes. But we don’t have to depend on early returns or guess about future outcomes. All we have to do is look at our own state’s economy over the past few years.
When Gov. Mike Pence signed the biggest tax cuts in state history in 2013 and 2014 — a $3.5 billion reduction in individual, corporate and death taxes — the Hoosier economy took off.
In the years since, Indiana has beaten the national average in terms of economic growth. Since the cuts took effect, Indiana’s economy has consistently outperformed those of our neighboring states and the nation as a whole with a lower unemployment rate.
We now consistently rank in the top 10 in the Tax Foundation’s State Business Tax Climate Index.
Certainly, Indiana’s economic recovery is to some degree part of the broader national recovery that has been taking place over the past year. But while a rising tide has lifted many boats, state tax policy has helped lift Indiana’s higher than most, and for longer.
President Donald Trump noted our success when he was here last fall pitching the tax reform package then making its way through Congress.
“Indiana is a tremendous example of the prosperity that is unleashed when we cut taxes and set free the dreams of our citizens,” he told an Indianapolis audience in September. “This state has claimed a powerful competitive edge built on low taxes and less regulation.”
And while there have been dire warnings from tax-cut opponents about the economic apocalypse that awaits us for daring to put more money into the pockets of everyday Americans, economists are generally sounding a different note.
“My sense is that tax cuts probably have their fingerprints on the employment numbers,” Mark Zandi, chief economist of Moody’s Analytics, said after the latest upbeat news on the jobs front. “I think we should see relatively strong employment numbers and overall economic growth through first couple of three quarters through 2018 as the tax-cut effects filter through the economy.”
Next month, workers will likely begin seeing more personal evidence as the IRS recalculates withholding and the smaller tax bite begins showing up in people’s paychecks.
At that point, prepare yourselves for another round of complaints from those who opposed the tax cuts. They seem to think several hundred or a few thousand dollars is a hill of beans.
But ask yourself, if several hundred dollars is no big deal, why do car insurance companies spend millions trying to persuade you to switch to their company to save a few hundred dollars a year?
Because those companies understand something that out-of-touch Washington politicians don’t. You earned that money, and getting to keep more of it means you can spend it on things that matter to you.
Another complaint you’re likely hearing is that greedy corporations will keep all the business tax cuts for themselves.
Well, wrong again.
Hundreds of companies with millions of employees all across America are already putting their money where their mouths are and sharing those tax cuts with their employees.
And it’s not just big national companies that are spreading the wealth. First Farmers Bank & Trust, based in Converse, announced it was raising its minimum starting wage by $2.50 an hour for new employees, providing a minimum year-end bonus of $750 annually to all full-time employees, investing a minimum of $250,000 per year for community development and support of local branch markets and investing a minimum of $150,000 annually to employee development and education.
Tax cuts work.
Indiana’s economic recovery in the wake of the 2013-14 cuts gave us a sneak preview, and now federal tax cuts are giving us still more evidence that you can’t go wrong trusting the American people with their own money.