Indiana’s major-party candidates for governor can’t bestow a job upon every unemployed Hoosier, but each has offered what he considers the next-best thing: at least $500 million in tax cuts.
Republican Mike Pence wants to reduce the state income tax 10 percent. He says that would save a family of four $228 a year and prompt small-business owners, most of whom pay their taxes as personal income, to start hiring. Democrat John Gregg would erase the state sales tax on gasoline, which he says would save households $261 to $522 a year and especially benefit lower-income Hoosiers. Not to be outdone by the Republican on business incentives, Gregg also has proposed credits that would essentially wipe out corporate income taxes for Indiana-based companies, plus a laundry list of job-creation tax credits aimed at exporters, manufacturers and small business.
There’s just one problem for job-hungry Hoosiers. Tax cuts of any flavor probably won’t fill the void, economists and policy experts said.
“Tax policy matters some, but it doesn’t matter a lot, at least according to the research I’ve done,” said James Alm, professor of economics at Tulane University in New Orleans. “What seems more relevant for state economic growth are things like what the government is using the money for.”
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