How Indiana (or any other state) can attract new businesses, increase job growth, and substantially increase state revenues.

It is quite obvious that the current financial problems of California are caused by too many expenditures and too little income. Certainly, that is an oversimplification, but it is a basic truth. It is also true for many other states during the recent economic reversal, but that’s not the only reason. Currently, California is experiencing substantial losses of revenue as business leave for overseas or for states where taxes on business are lower. What would happen if there were a state, say Indiana, where there were no taxes on businesses?
State lawmakers would have apoplexy over such a proposal. But look at a few facts:

All state revenue is ultimately paid by individuals in the prices paid for goods and services provided by business. This includes individual owners, stockholders, and all professionals. The state merely uses these businesses to collect tax money from customers or clients and turn it over to the state. This is true for any tax paid by business or corporations.

Many times, tax abatements and other tax incentives are offered to investors or businesses to get them to move to any given locale. If this is so successful for certain instances, why wouldn’t it work for all instances. And who ultimately pays more to make up for the lost revenue? Individuals! Why is this done? To provide jobs and economic growth in the community which will ultimately result in a larger tax revenue for the community from increased individual income.

Since, in reality, individuals ultimately pay all taxes, why not move the tax burden directly to the individual and reduce the effort business now makes to collect those taxes and pass them on to the state? Granted, this would be very unpopular unless individuals understood the reality of transferring those taxes from hidden - in the costs of the goods and services purchased - to obvious - taxes paid directly by the individual.

Consider removing all taxes for business - what would be the results:

BENEFITS:

Businesses would have a substantial incentive to stay in Indiana or to move to Indiana from many other states. The changes could be phased in over several years. Start by offering immediate tax free status to any new business that moves to Indiana. The same could be done for a new investment by businesses already here. Follow this by removing all taxes from existing businesses over a two year period.

The added potential for job growth would be a shot in the arm for Hoosier workers. The actual potential would be difficult to assess until it actually happened, but there is no doubt it would be substantial. This is the argument always used for any tax abatement incentive for business. If it works on a small scale, why wouldn’t it work as well on a state-wide scale.

Not only would the taxes on business be reduced but savings of the current costs of record keeping and reporting would enable Indiana businesses to pass these savings on to consumers in the form of lower prices. Think that wouldn’t happen? Consider the business that now goes outside the state via mail order and the Internet because of competition by businesses with lower costs and taxes.

This blog is not yet finished. It should be within a few weeks.

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