It’s hard to believe that Ross Perot’s heyday was 18 years ago. For those younger folks, Perot was the independent presidential candidate who used infomercials and charts to effectively communicate that the federal government was spending too much money.

Getting people to understand budget deficits, however, is usually quite a bit trickier. The Tax Foundation may have found a way with its new analysis. Some details below and a full link here, but the bottom line on erasing the current deficit: Instead of couples paying income tax rates that range from 10% to 35%, try these on for size — 24.3% to 84.9%. Translation: future generations are going to be paying the price for years and years to come.

At no point in the next ten years, according to the Obama Budget, will the deficit ever shrink to as little as 3 percent of GDP. According to the CBO (Congressional Budget Office), it will never even get as low as 4 percent. And the dire deficit predictions of reliable nonprofit groups like the Pew Trust and Peterson Foundation are even more alarming: the deficit won’t even shrink to 5.5 percent of GDP in their analysis.

‘Mind boggling’ is the term Martin Sullivan of Tax Analysts uses to describe the tax and spending changes that would have to occur just to get the deficit down to 3 percent of GDP.

"Our gridlocked, dysfunctional Congress simply cannot bring itself to absorb these types of painful shocks," says Sullivan. "Given these unprecedented pressures I believe that within the next decade there is more than a 50-50 chance there will be an upheaval either of the political system or the economy."

The trouble with political discourse about the deficit is that voters are often numb to the subject, and as a result, politicians are able to avoid the unpopular votes for cutting spending or raising taxes. Whether deficits are expressed in hundreds of billions of dollars or percentages of GDP, their importance is hard for leaders to convey or for the public to grasp.

But as big as deficits were back then (the early 1990s), they were never so huge that they couldn’t be remedied by holding down the rate of spending growth and adding a couple points to an income tax rate. Now, as the table below shows, that is out of the question. Even in 2012 or 2015 when the effects of the housing bubble and the fiscal stimulus have dissipated, the rate hikes required to balance the budget are unthinkable. 

It sounds good on paper, but personally I’m not buying it. In this case, "it" is a New Jersey proposal that says if the state is going to give you your paycheck, you have to live within its borders.

With our capital’s geographic presence in the middle of the state, I can’t imagine too many are commuting from Ohio, Illinois, Kentucky or Michigan to Indy. But state workers are not confined to the big city. The New Jersey bill would impact teachers, police officers and firefighters as well as all city and county government employees.

There are strong Indiana connections to Cincinnati, Chicago and Louisville in addition to numerous other areas in the four neighboring locales. I grew up in Dearborn County, a lot closer to Cincy than Indy, and a tri-state ingredient seems to be active in all four corners of the state.

The full New Jersey article is here. Below is a quick summary:

State Sen. Donald Norcross (D., Camden), the sponsor of the bill, said, "It is very simple. If you want a paycheck from New Jersey taxpayers, you should have to live here, pay your taxes here and be part of your community."

Norcross, who also leads the 85,000-member South Jersey AFL-CIO Central Labor Council, said an estimated 10,000 public employees live out of state, costing the state about $22 million in income taxes.

"What really gets me is when I look at the mass exodus every night out of Trenton to Pennsylvania," Senate President Stephen Sweeney said. "If it’s good enough to work for the state, it should be good enough to live in the state of New Jersey," he added.

Public employee unions said that while relatively few of their members work out of state, they strongly oppose the measure for those who do.

"I think it’s a ridiculous proposal," said Bob Master, regional political director for the Communication Workers of America. "It will have no meaningful impact in the long run on the state’s budget problems and it will cause completely unnecessary hardship for our members."

Master said that if New Jersey’s neighboring states were to adopt similar tactics, the results would not be pretty.

It’s come up a few times over the years, and the Indiana Chamber has been successful in helping to swiftly swat it away. It is becoming a common topic in many states as revenues have continued to plummet. It is … a sales tax on services.

The list of services is long and varied — from hair cuts and funerals to accounting and legal help. When it’s businesses working with other businesses, it gets even more complicated. Yes, states want more tax revenue, but do they benefit from putting policies in place that hurt companies and, in many cases, individual consumers.

Other questions — if states wish to opt for any additional taxes at all: What services are exempted? Do you lower the overall tax rate and, if so, how much? Will such taxes send people over state lines where the same services may be tax-free?

Stateline.org has a look at the latest. Full story here, and some excerpts below:

With tax revenues at a historic low and federal stimulus dollars drying up, states like Michigan and Pennsylvania are eying adding a sales tax to some of the 180 services that states could be taxing, ranging from pet grooming and dating services to dental and legal services. The change would be a fundamental shift in states’ tax systems, but the proposals are already running into stiff opposition from the business community.
  
States have long taxed goods, like cars and appliances, since the 1930s, bringing in nearly 35 percent of the general revenue for the 45 states that have a sales tax. (Alaska, Delaware, Montana, New Hampshire and Oregon don’t have one.)
 
But the shift in the U.S. economy from producing goods to services has meant fewer tax dollars flowing into states that have been slow to tap the service pool. Hawaii, New Mexico, South Dakota and Washington state tax more services than other states, according to the most recent data available.
 
California, Illinois, Massachusetts and Virginia probably could increase their sales tax revenue by more than a third if they broadly taxed services purchased by households, such as landscaping services, health club memberships and car washes, according to Michael Mazerov, a senior fellow at the Center on Budget and Policy Priorities, a Washington, D.C., group that examined states’ options for expanding sales taxes on services in a 2009 report.

A handful of states, among them Arkansas, Connecticut, Ohio and Nebraska, did levy sales taxes on additional services as they began to recover from the 2001 recession, but the changes were largely incremental, not comprehensive like the plans in Michigan and Pennsylvania.
 
States back then took the slow approach because taxing services is politically explosive and a few well-publicized debacles have made others leery of trying. Florida, for example, passed a far-reaching tax on most personal and business services in 1987 only to repeal it the following year because of intense business opposition. Massachusetts approved a sales tax on certain services in the summer of 1990, and it was canned by the following spring. And more recently, Maryland in 2007 added what was dubbed the “tech tax,” which was rescinded before it took effect after the computer industry mounted an aggressive campaign against it.

Chamber President Kevin Brinegar explains what the state legislature must do to keep the unemployment insurance tax increase from costing Indiana jobs.

I had an opportunty to talk briefly with Frank Luntz in preparation for his post-Legislative Reception appearance before an Indiana Chamber audience of business and legislative leaders on February 16. He promises new polling data on just what the public thinks of the business community and updated language for companies to utilize to emphasize their contribution to community well-being.

Outside of that conversation, Luntz is being credited (or disparaged, depending on your view) for his role in fighting financial regulatory reform. A recent report included the following:

Republican message guru Frank Luntz has put together a playbook to help derail financial regulatory reform.

In a 17-page memo titled, "The Language of Financial Reform," Luntz urged opponents of reform to frame the final product as filled with bank bailouts, lobbyist loopholes, and additional layers of complicated government bureaucracy.

"If there is one thing we can all agree on, it’s that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash must never be repeated," Luntz wrote. "This is your critical advantage. Washington’s incompetence is the common ground on which you can build support."

Luntz continued: "Ordinarily, calling for a new government program ‘to protect consumers’ would be extraordinary popular. But these are not ordinary times. The American people are not just saying ‘no.’ They are saying ‘hell no’ to more government agencies, more bureaucrats, and more legislation crafted by special interests."

On the specific issue of a Consumer Financial Protection Agency, Luntz argued that opponents should stress the high-cost of creating an additional regulatory body in addition to the damaging effects it will supposedly have on "small business owners" (as opposed to, merely, small businesses).

"Owning a small business is part of the American Dream and Congress should make it easier to be an entrepreneur," wrote Luntz. "But the Financial Reform bill and the creation of the CFPA makes it harder to be a small business owner because it will choke off credit options to small business owners."

More than 300 Hoosiers have purchased their tickets to hear Luntz in person. It will be most interesting.

OK, we realize it’s February and the end of December/beginning of January were the times for the "top 10" lists for the past year or decade. But in looking at Indiana Chamber advocacy efforts, we couldn’t resist putting together some of the top issues in which we’ve been fighting the good fight for the business community. We didn’t rank them; that would be a really tough job.

I, and quite a few others on the Chamber team, have been here throughout (not the 1922 official start of the organization) — dating back to the 2002 tax restructuring and including key victories in economic development, education, tax, local government and more. The one-pager can be found here; but first a few observations.

• 2005 was simply a big year. Daylight Savings Time became a reality after only more than a few decades of trying, a series of important education policies were enacted and a variety of tax credits were expanded
• The most underrated item on the list, in my view, has a 2005 connection as well. The creation of the Indiana Economic Development Corporation took place in 2003 with a scheduled implementation in July 2005. Gov. Mitch Daniels, however, made the transition priority one upon taking office that January and the IEDC was off and running on a record-setting period of private sector investment and job creation
• A 2008 entry, removal of township assessors, MUST be complemented by additional local government reform measures. Whether it’s this year, in 2011 or through other measures, it’s time has more than come for taxpayers, local residents and all involved

Advocacy, of course, is just one way the Chamber works for its nearly 5,000 members and 800,000 employees of those Hoosier companies. But it’s a big one, making a difference each and every day.

Interesting numbers from the Tax Foundation, which is in the business of analyzing interesting (tax) numbers. Its annual review of what states did with their tax policies included some strong praise for Indiana. A few excerpts from the release and a link to the full study, which takes some to task for targeted tax hikes and accounting gimmicks (instead of reducing spending).

Nine states increased individual income tax rates (five states reduced their rates), six states raised general sales tax rates, 17 states increased excise taxes on cigarettes and five states increased rates of alcohol excise taxes.
 
“Two states – Arkansas and Indiana – managed to roll back spending growth commitments and take actions to limit spending, but other states have either kicked the budget can down the road or increased taxes,” said Tax Foundation Director of State Projects Joseph Henchman, who authored Tax Foundation Fiscal Fact No. 204, “A Review of Significant State Tax Changes During 2009.”  

“With state revenues declining due to the tough economic situation, most state leaders in 2009 have tapped high-income earners, smokers, out-of-state business transactions, or other targeted groups, those being the only people that politicians feel safe raising taxes on,” Henchman notes. 

California, Connecticut, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon and Wisconsin increased individual income tax rates. States that increased sales taxes include California, Massachusetts, Minnesota, Nevada, North Carolina and the District of Columbia.
 
Other miscellaneous tax changes in 2009 include obesity and soda taxes, excise taxes on plastic bags (often mischaracterized as “fees”) and “Amazon” taxes, which force out-of-state retailers to collect sales taxes from customers if the companies have affiliate and advertising relationships with in-state businesses.