New Mass Transit Taxes Punish Hoosier Taxpayers
Below is testimony from AFP-Indiana State Director Chase Downham on Senate Bill 176 to the Senate Tax and Fiscal Policy Committee this morning. You can take action on this issue here.
Mr. Chairman, members of the committee, good morning. My name is Chase Downham. I am the Indiana State Director of Americans for Prosperity. Americans for Prosperity is the state’s largest grassroots organization that is dedicated to advancing policies that promote economic freedom, protect taxpayers and give Hoosiers the best opportunity to increase their individual well-being. Today, we have nearly 50,000 activists located across our state in all 92 counties.
First, let me say we appreciate the summer study committee’s work to take a closer look at this issue after much debate last year. We appreciate the effort to keep whatever tax increases on individuals would result from this legislation to remain largely within the current framework available to county governments. We also value the amendment to this bill to prohibit the use of funds for light rail. According to the Cato Institute, mass transit projects utilizing light rail on average go 40% over budget.
However, after reviewing the bill’s fiscal impact statement, I am here today to share some of our concerns with Senate Bill 176. As a group committed to protecting taxpayers, Americans for Prosperity cannot support a proposal that could lead to taxes going up on hardworking Hoosiers as well as job creators.
This proposal includes a number of potential tax increases.
First, there’s the income tax increase under the LOIT allowed for the property tax levy freeze that can range anywhere from .1 to .25% in this legislation. If enacted by all of the participating counties at the full .25% rate, this new tax would take over $100 million annually from the hardworking Hoosiers affected in this bill.
There is also the corporate income tax increase to cover at least 10% of each county’s estimated transit operating costs. If exercised at just 1% (which is difficult to determine), this is estimated to roughly take $25 million a year from local job creators.
Now, I realize there are some here who would say: If businesses want this, they should pay for it. While it is true that many leaders in the business community have supported the efforts to expand mass transit, our organization believes the countless job creators without a voice in this debate should not be punished under these new potential tax hikes.
Finally, the mandate that at least 25% of operating costs are covered by fares, will certainly hurt those in our community who most utilize and are perhaps in the most need of public mass transit. According to this bill’s fiscal impact statement, IndyGo currently charges fares that cover about 17% of its annual operating costs. A 25% mandate, even with no expansion in mass transit, would suggest an immediate increase in today’s fares. Couple this with a multi-million dollar expansion, and we can certainly see fares dramatically increasing from where they are currently.
Altogether, Senate Bill 176 shows a path to well over $125 million a year in new taxes coupled with increased transit fares.
Many say this legislation is a scaled back version of last year’s mass transit proposal, but as much as our organization disliked last year’s proposal, I will say that we could at least debate the transit plan. I believe what you have in front of you now is something that is very unclear as to what it is funding and ultimately punishes taxpayers of all stripes.
At the end of the day, it seems this legislation is simply a tax increase in search of a mass transit proposal.
For these reasons, I respectfully ask you to protect local taxpayers and job creators and reject Senate Bill 176.
I would be happy to answer any questions you might have for me.
Like this post? Chip in $5 to AFP.