The Washington PostDemocracy Dies in Darkness

Opinion Rebating tax dollars doesn’t ‘cost’ a state anything. It’s your money!

(Anna Kim/iStock Photo)

A newspaper account early this year reported on pending legislation that would “slash billions of dollars worth of taxes” in my home state of Indiana. The article was more interesting for its word choices than for its content. Twice, it stated that the proposal would “cost the state” money. Twice, it warned that the state would “lose out” on large sums. And the article capped its evident alarm by labeling the bill a “potential hit” against both state and local governments.

This is not to pick on the writer. As yet another young reporter in the parched landscape of what was once local journalism, she couldn’t bring a firsthand, historically informed philosophical understanding to the assignment. The article simply showed the implicit biases now thoroughly ingrained across what these days is referred to as the corporate press. The negative slant about the tax policy in question, a legitimately debatable matter, is less important than the mentality it reflects about whose money we’re discussing.

I can’t and don’t pretend to objectivity about the policy, which provides that, when state reserves exceed a specified percentage of the annual budget at the end of a two-year fiscal period, they are automatically returned per capita to the taxpayers, the same amount for every return. I proposed the concept while seeking reelection as governor in 2008, and it was enacted in 2011.

In a TV ad suggesting the idea, I said of surpluses: Better the money stays in your pocket than burns a hole in the pocket of government. That seemed to make sense to the citizens who employed me, and ultimately to a large majority of their elected representatives.

The refund was first triggered in 2012, with millions of Hoosiers receiving $111 each, or $222 on joint returns. For 2021, when the surplus reached 23 percent of the budget, more than 4 million taxpayers will receive — or, better said, retain — a slightly larger per capita amount. If current revenue forecasts are even remotely accurate, a third and still larger refund would occur in 2023.

The refunds are the same for all taxpayers for two reasons. It is administratively simple, so that the public can readily understand it, and a large bureaucracy can execute it without errors. Secondly, it is progressive, more valuable to people of moderate means than to their wealthier neighbors.

The original bill has been tinkered with a couple of times since its author left public life. Now half of the “surplus surplus” goes to further strengthen already solid pension funds. And this year, an almost unanimous, bipartisan General Assembly extended the refunds to people not paying income taxes, on the sensible basis that these citizens do pay sales and excise taxes to the state.

Readers in a city where mere billions of dollars are rounding errors, and which is surrounded by some of the nation’s richest counties, cannot be expected to be impressed with sums like these, although I can attest that for many Indiana households they are not immaterial. But the amounts refunded, or even the fiscal brake of getting excess dollars out of the government’s hands before someone invents a way to spend them, were never the central point.

The real point, one hopes a didactic one, was that property in a free society belongs not to the state but to its people, and it should be expropriated by the state only for truly necessary purposes, in truly necessary amounts.

It’s more than just a matter of money, because every act of taxation imposes a diminution of freedom.

During many visits to high school classrooms, I often engaged in a little stunt in which I would ask if anyone was carrying a $5 bill. When some unsuspecting student produced one, I would walk over, grab the bill, saying “Many thanks” as I pocketed the money, and keep walking. When the tittering subsided, I would feign surprise, but before returning the cash, I would make the point that their classmate was now slightly less free than a moment ago, no longer in possession of the five bucks or the option of deciding what to do with it. As I said in that original TV ad, “After all, it’s your money.”

Next month, Indiana taxpayers will receive checks restoring to them some $125 apiece of income they earned. While by then it might buy only a couple of gasoline fill-ups or family meals, it will convey an important message: “After all, it’s your money.”

An old saying in our state holds that “when a feller says, ‘It ain’t the money, it’s the principle of the thing’ … it’s the money.” Good line, and generally true. But sometimes, it actually is the principle.