A state budget remedy: time to cancel the 1996 auto excise tax cut.

• Author: Marcus, Morton J.
• Position: Last Word

The 150 members of our state legislature can cut the state's deficit by $236.4 million. They are unwilling to do this because they are afraid of a specter they have created.

In 1996, our good and generous representatives were wallowing in money and chose to cut a fair and reasonable tax-the auto excise tax. They declared it was an unfair tax, burdensome and hated by the citizens of Indiana. What evidence did they have for these declarations? We never knew and we shall never know. Elected representatives are not required to support their claims with facts. All they need do is assert that the public feels this way or that and they can scare each other into acting accordingly.

The auto excise tax is a vestigial tax. Once upon a time, we had a property tax that said if you owned it, you paid a tax on it. It might be land, a building on that land, or the contents of that building. It was a good system. At that time, property was a good proxy for both income and consumption.

But as record-keeping improved, we found ways of taxing income and consumption more directly. That gave people who owned property a great chance to agitate for lower property taxes.

As time went by, we got rid of taxes on stocks, bonds, furniture, radios and other things we owned. We discovered people could pay a sales tax when they bought something and avoid the nuisance of an annual personal property tax. Now this was very nice for the state legislature. It reduced local tax collections and gave the money to the state for the 150 wise ones to distribute as they saw fit. We never did trust those locals.

Thus it came to pass that the personal property tax on the automobile (motorcycles and light trucks are included) was transformed into an excise tax. It is easy to tax a car when its license is renewed each year. And what a beautiful tax it is! The newer your car, the higher your tax. The more expensive...