Time for some tax ranting

Yesterday's Rensselaer Republican had an article about a proposal to require building contractors who do work in or near Rensselaer to register. One of the justifications for the proposals was that it was a "way to collect funds without having to raise taxes or utilities." They can call it a fee if they want, but it still is a tax. It would be a fee if the contractor got something back for the money, but in this case it seems to be nothing but a forced transfer, which is a tax. This tax will discourage contractors from working in Rensselaer and will probably result in somewhat higher costs to those who hire contractors as the contractors pass the expense forward to buyers. Economists dislike narrow taxes of this sort because they cause more distortions in people's decisions than broader taxes.

Moving on to the county, Jasper County still has the second highest county income tax in the state for residents. (Pulaski County is the only one higher.) A Facebook friend posted that she was very happy to no longer be living in the county. If she were still a Jasper-County resident, she would owe $482 on her state taxes. But by moving to Boone County she will get a $433 refund. (I realize that I have already posted on this topic. A couple of past tax rants here and here.) Jasper County inverts Henry George, he of single tax fame. (If you are not an economist, you might not understand the fame part.) Economists have a fondness for taxes that do not change behavior, and a tax on land value is one of the few taxes that do not change behavior. (Taxes on improvements to land will change behavior, so the property tax is the same as a land tax, but it is as close as we are likely to get.) As far as I can tell, the higher income tax allows for very low property taxes. so it appears that the large landowners have a great deal of clout with the people running the county.

Illinois recently raised its income tax from 3% to 5% and Indiana and other surrounding states are telling Illinois businesses that they should relocate. I doubt if any will want to move to Jasper County. They might end up with a higher tax rate here.

Jasper County does not have the second-highest tax rate for nonresidents--quite a number of other counties tax nonresidents at a higher rate. So if you can, you should work here but live elsewhere--as most of the professors at SJC do.

Finally, you probably realize that you will not be getting federal tax forms in the mail this year. The federal government wants you to file electronically. Some of the forms are available at the library, but I have not found the instruction books there yet. Apparently printing was delayed because our genius congress decided to wait until the end of the year to make changes. They have done the same thing in the past. This kind of behavior is evidence of a legislature that is incompetent. We will see if the current crop can do better.

Even though the government wants you to file electronically, many people cannot do that without purchasing software from a private company. Wouldn't it be nice if the government itself would make the software that they want you to use available? On the other hand, I recall filling out FAFSA forms a few years ago on a government website that only worked properly if you were using Internet Explorer. Whoever they had create the site did not bother to make it standard-compliant so that it would allow any browser. So maybe we are better off having a private company provide the software rather than relying on the government to produce it.