Is shift to sales tax good for the economy?

• Position: Indiana Indicators

There may be some truth to the adage that "there is no safe harbor when the legislature is in session," but with Indiana's economic growth being mentioned in every breath of the tax debate, businesses could at least take some comfort in knowing that the issue of competitiveness would be on the table.

The list of roadblocks to business spending that are being removed is quite impressive. To begin with, the tax package rolls back property taxes, which are based on land and capital, and shifts the tax to consumer spending in the form of higher sales taxes. And the hated inventory tax will be gone in five years.

Is shifting tax burdens away from the property to the sales tax good for the Indiana economy?

The evidence we have from economic studies, conducted both at Bail State and elsewhere, suggests that it is. In swapping these tax bills we are making the state more attractive to business investment at the same time as we make it a less friendly place for households to spend their money. The key factor that tips the balance is the greater leverage that business spending has in the local economy. Business spending makes Indiana facilities more competitive and helps them grow market share and the overall economic pie.

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Latest Previous Period Period Employment (000) U.S. Jun. 02 130,740.0 130,704.0 Indiana Jun. 02 2,904.8 2,926.2 Manufacturing Employment (000) U.S. Jun. 02 16,750.0 16,773.0 Indiana Jun. 02 624.2 620.8 Non-manufacturing Employment (000) U.S. Jun. 02 113,990.0...