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News-Sentinel.com Your Town. Your Voice.

Indiana needs to attract its former Hoosiers by improving tax policy

Nate LaMar
Nate LaMar
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.The Associated Press
Thursday, April 18, 2013 12:01 am
On a recent business trip to India, I visited Col. Larry Redmon, an Army buddy from Logansport, where his mother still lives. Larry is now Army attache at the U.S. Embassy in New Delhi. He owns a home near Fort Campbell, Ky., in Clarksville, Tenn., to which he will most likely retire. During our visit, he lamented brain drain in his Indiana hometown, to which he returns once a year and is often invited to speak. He is full of energy and solutions to Logansport’s problems, mainly involving mentoring its youth.

More recently, as an alum of Hagerstown High School, I attended the Nettle Creek Athletic Hall of Fame Banquet, honoring alumni’s achievements in high in high school and college sports. Two of my classmates, Heather (Bryn) Garrett and Mike Woods, and a contemporary, Mark House, were recognized.

Heather and I went to West Point, where she played basketball. While I became a reservist, she stayed on active duty and now serves as a colonel at Fort Knox, Ky.

Woods excelled in football at Taylor University and is now a Wall Street CEO, whose home is on Long Island. He endowed a scholarship for Hagerstown’s scholar-athletes. House wrestled at Annapolis, retired as a Marine Corps lieutenant colonel and now teaches JROTC at a high school in Texas, where he owns a home.

What concerned me most about the banquet was that, despite an advance local newspaper article in the Nettle Creek Gazette and Facebook invitations sent by the HHS athletic department, I was among only two of our classmates in attendance. Only three of Mark’s classmates were in attendance. Is this the kind of “welcome home” such alumni deserve?

But maybe it is symptomatic of the brain drain our state faces. My experience of Hoosiers leaving Indiana to serve in the military or pursue educational and other job opportunities and not returning is not isolated, and our state’s tax policy is partly to blame.

I do not pretend to be the tax expert that State Senate Appropriations Committee Chairman Luke Kenley is. But I have learned something from six years on County Council: Governments can create or destroy a positive business climate by the tax policies they choose.

A common denominator between Tennessee and Texas, where Larry and Mark own homes, is that neither has a state individual income tax (Tennessee only taxes interest and dividend income, as does New Hampshire). Hence, these states can better attract businesses, military and other retirees. Almost a decade ago, Indiana phased out the inventory tax. But we were the 49th state to do so. Indiana is now phasing out its inheritance tax.

Gov. Pence has proposed cutting Indiana’s state income tax by 10 percent. Ninety percent of small businesses are taxed at the personal income tax rate. If successful, Indiana would have the lowest tax rate in the Midwest on businesses. This could be the first step toward eliminating our state income tax altogether, which would help us to attract those we have lost to brain drain. The trade-off could be higher sales tax, like Texas, Tennessee and New Hampshire, which would give people incentive to save more and spend less.

In phasing out Indiana’s income tax, let’s not be “a day late and a dollar short” as we were with the inventory tax. Like Texas, Tennessee and New Hampshire, Indiana can become a leader in attracting back “boomerangs” we lost to brain drain years ago, and others, so they can retire here with their desire to give back, in order to help improve the quality of life in their communities.

If we solve our brain-drain problem, many of Indiana’s other socioeconomic problems will eventually begin to fade.


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