Indiana Tax Assessment

[audtatious]

As Barack Obama and Hillary Clinton pick through this state's primary results come Tuesday, the last person on their minds will be Bart Peterson. Yet the Peterson ghost may well come looking for the eventual Democratic nominee.

Mr. Peterson was, until recently, the popular Democratic mayor of this fine city. Then voters went to the polls in November and threw him out in favor of an unknown and underfunded Republican. It was among last year's biggest political upsets, and marked the first time in 40 years Indianapolis voters had canned a sitting mayor. The source of their anger? Taxes.

In particular, the county's income tax rate, which Mr. Peterson raised to 1.65% from 1%. Coming into an election year with a 75% approval rating and a mountain of campaign cash, Mr. Peterson thought he could risk the tax-hiker label. He felt further bolstered by his argument that the tax was earmarked for crime fighting. He squeaked his levy through in July; by November he'd been washed out on a tide of outrage.

Indiana isn't alone in its tax discontent. As the economy has slowed and home values have slipped, state and local governments have been raising taxes to cover revenue shortfalls. This has squeezed middle-class households, just as surely as higher gas and food prices, or rising medical costs. Voters last year responded by shooting down tax-and-spend proposals in Oregon, New Jersey, Iowa, Washington and North Carolina.

Voters in the Hoosier State are near revolt, last year throwing out 21 mayors in primaries, many for failing to stem out-of-control property taxes. Antitax placards decorate yards, and the growing tax burden is a routine source of anger among voters I interviewed on Indiana streets.

This bitterness was left unacknowledged by the Democratic presidential candidates as they have trudged around the state. They were quick to share residents' pain at the pump, or with utility bills, but no real mention of the burden of the tax man. Quite the contrary, like Mr. Peterson, they trumpeted their proposed tax hikes.

At an outdoor rally in the rural, southern Indiana town of Princeton, Mrs. Clinton railed against "Wall Street" money managers, promising to hit them harder. In Indianapolis's Garfield Park, chatting with a small group of families, Mr. Obama matched her, vowing yet again to "roll back the Bush tax cuts" that went to the "wealthiest individuals" and "wealthiest corporations."

The big Democratic bet in this presidential election is that they can avoid a Peterson fate by focusing solely on tax hikes on the "rich." Polls back them up: An increasing number of middle-class Americans are fine with talk of higher taxes, so long as those taxes are aimed at someone else. And to make their tax hikes more palatable, both candidates have vowed to turn them around into tax cuts for the "middle class." Nobody making less than $200,000 to $250,000 will pay a penny more, the populists say.

The flip side of this bet (and where Mr. Peterson gets to rattling his chains) is that polls also show a majority of Americans remain convinced that a politician willing to tax a few is usually a politician willing to tax everybody. This is where the struggling economy and local tax fights bump up against the Obama-Clinton tax strategy.

The more economically anxious voters are, the more they fear a tax hike. Soaring local taxes have pushed the issue to the front of angry voters' minds, where it threatens to overshadow Democratic arguments that more federal money is necessary for such initiatives as health care.

This risk has crystallized as the Democratic tax plans have started to get a closer look. At the recent Philadelphia debate, Mr. Obama was asked how he could claim he wasn't raising taxes on middle-class Americans, given his plans to raise the capital-gains tax rate on stocks that belong to . . . middle-class Americans. He didn't have an answer, but the public has a view.

An ensuing Rasmussen poll found that 65% of likely voters opposed a capital-gains rate hike; 52% said such a hike would hurt the economy. And 60% felt a candidate who would raise capital gains taxes would increase other taxes.

Republican nominee John McCain's challenge is to bring the risk home to voters. This will involve moving beyond the broad Republican antitax line into a more specific message, one that outlines the dangers of any tax hikes at a time of economic stress.

The campaign has started to do this; staffers no longer publicly talk about the need to "make permanent the Bush tax cuts," a line that falls flat with voters of all stripes. Instead, Mr. McCain is linking higher taxes with wasteful spending, and stressing that Democrats are threatening the biggest tax increases in history, ones that are certain to hit average voters in some form or another.

The evidence from Indiana is that more than a few voters are ripe to hear that message.

http://online.wsj.com/article/...nists

[Repo Man]

Liberal Democrat = Tax and Spend? Never...

[rn79870]

Geeze, I'd love to see a chart that really represented the taxes an American pays. Income tax, federal, state, and local. Sales tax, excise tax, property tax, fees for everything from car registration to business licenses. Crap, they tax you after you die, by charging for a death certificate.

I'll bet in the life of a dollar, it returns several times it's value to the governments in as form of tax.

[audtatious]

Yeah, I would agree