OPINION: Indiana property tax policy changes hatch 'lobbyist math' proposals

Michael Hicks, Ph.D., director Bureau of Business Research, Ball State University

I am a huge fan of a Discovery Channel TV show called "World's Dirtiest Jobs."  I don't get to watch it often. But when I do, I revel in host Mike Rowe's exploits in some of the nastiest jobs imaginable.  But, I think there's one job I am more afraid of than any on his show. 

There's no amount of money that could make me a state legislator during a fiscal crisis.

For state legislators (in Indiana and elsewhere), the pay is bad, there are no real perks, and there's little future in politics.  In truth, State legislators are more like the football team at a small college.  There's no scholarship money, they have to get up early every day for practice, and none are going to the NFL.    

I think the worst aspect of being a state legislator has got to be dealing with "lobbyist math".  This phenomenon is most common during significant changes to tax policy.   

Example of lobbyist math I have seen this legislative session have mostly focused on property tax proposals.  One lobby group complained that moving about 15 percent of school costs from the property tax base to income and sales taxes would cause school funding to become less stable.  It is revenues, not expenditures that are subject to instability.  

Another group provided an estimate of their tax plan which used interest rates that were calculated down to four decimal points (yes, that is one ten thousand's of a percent), four years from now.  That precision is demonstrably silly, but it makes the analysis appear thoughtful and sophisticated.    

Another example of lobbyist math is the technique of developing a proposal that leaves the one big piece to the legislature. This year, one lobby group has constructed a property tax elimination plan with detailed estimates through 2018.  At first blush, it sounds like a clever, forward looking plan.  But sadly it leaves a mystery tax on business "to be determined by the legislature."  Of course, the only real option is a doubling of the State's corporate tax rate, making it the nations' highest rate.   

Pulling against the lobbyist math are sound principals of taxation that have been the mantra of economists and good governance watchdogs for generations.  A "broad base" with a low rate is always the best answer to taxes.  Any proposal that narrows the tax base (eliminates a tax) inevitably has the stamp of special interests.    

Narrowing the tax base is not a conservative or liberal principal. How much we spend, and what we buy with our tax dollars is fuel for a debate.  But, whatever amount of tax dollars we collect; it is in our common interest to minimize damage to the economy from the collection of taxes.  That is a chief benefit of a broad tax base.   

Of course, lobbyist math represents a departure from shared interests.  It is the realm of privileged interests.  The next few weeks will require lots of thoughtful analysis by Hoosier lawmakers.