Lobbyist Math: it's a phenomenon that's common in tax debates.

I THINK THE WORST aspect of being a state legislator has got to be dealing with "lobbyist math." This phenomenon is most common during significant changes to tax policy.

Examples of lobbyist math I have seen this legislative session have mostly focused on property tax proposals. One lobby group complained that moving about 15 percent of school costs from the property tax base to income and gales taxes would cause school funding to become less stable. It is revenues, not expenditures that are subject to instability

Another group provided an estimate of its tax plan that used interest rates that were calculated down to four decimal points (yes, that is one ten-thousandth of a percent), four years from now. That precision is demonstrably silly, but it makes the analysis appear thoughtful and sophisticated.

Another example of lobbyist math is the technique of developing a proposal that leaves the one big piece to the legislature. This year, one lobby group has constructed a property tax elimination plan with detailed estimates through 2018. At first blush, it sounds like a clever, forward-looking plan. But, sadly, it leaves a mystery tax on business "to be determined by the legislature." Of course, the only real option is a doubling of the state's corporate tax rate, making it the nation's highest rate.

Pulling against the lobbyist math are sound principals of taxation that have been the mantra of economists and good governance watchdogs for generations. A "broad base" with a low rate is always the best answer to taxes. Any proposal that narrows the tax base (eliminates a tax) inevitably has the stamp of special interests.

Narrowing the tax base is not a conservative or liberal principal. How much we spend, and what we buy with our tax dollars is fuel for a debate. But, whatever amount of tax dollars we collect, it is in our common interest to minimize damage to the economy from the collection of taxes. That is a chief benefit of a broad tax base.

Of course, lobbyist math represents a departure from shared interests. It is the realm of privileged interests. The next few weeks will require lots of thoughtful analysis by Hoosier lawmakers.

--Michael Hicks is director of the Bureau of Business Research at Ball State University.

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PERIOD PERIOD EMPLOYMENT (000) U.S. DEC. 07 138,495.0 138,495.0 INDIANA DEC. 07 3,012.0 3,012.0 MANUFACTURING EMPLOYMENT (000) U.S. DEC. 07 13,919 13,950.0 INDIANA DEC. 07 554.7 554.6 NON-MANUFACTURING EMPLOYMENT (000) U.S. DEC. 07 124,576.0 1,245,270.0 INDIANA DEC. 07 24,573.0 24,677.0 UNEMPLOYMENT RATES (%)NEMPLOYMENT RATES (%) U.S. DEC. 07 5.0 4.7 INDIANA DEC. 07 4.4 4.4 ANDERSON DEC. 07 5.8 5.6 BLOOMINGTON DEC. 07 3.7 4.3 COLUMBUS DEC. 07 3.4 3.3 ELKHART/GOSHEN DEC. 07 4.6 4.7 EVANSVILLE DEC. 07 4.2 4.2 FORTWAYNE DEC. 07 4.6 4.6 GARY/HAMMOND DEC. 07 4.6 4.8 INDIANAPOLIS DEC. 07 3.9 3.9 KOKOMO DEC. 07 4.9 4.8 LAFAYETTE DEC. 07 3.7 3.7 MICHIGAN CITY DEC. 07 5.1 4.8 MUNCIE DEC. 07 5.0 4.9 SOUTH BEND DEC. 07 4.8 4.7 TERRE HAUTE DEC. 07 5.1 5.0 PERSONAL INCOME ($BILLIONS) U.S. NOV. 07 11,868.0 11,1825.0 INDIANA IIIQ.07 215.1 212.3 RESIDENTIAL BUILDING PERMITS INDIANA NOV. 07 1,597 1,744

YEAR %

AGO CHANGE EMPLOYMENT (000) U.S. 138,477.0 1.0 INDIANA 3,022.0 0.2 MANUFACTURING EMPLOYMENT (000) U.S. 14,131.0 -1.5 INDIANA 561.0 -1.1 NON-MANUFACTURING EMPLOYMENT (000) U.S. 123,036.0 1.3 INDIANA 2,445.4 0.5 UNEMPLOYMENT RATES (%)NEMPLOYMENT RATES (%) U.S. 4.4 INDIANA 4.7 ANDERSON 5.5 BLOOMINGTON 4.1 COLUMBUS 3.6 ELKHART/GOSHEN 5.2 EVANSVILLE 4.6 FORTWAYNE 4.6 GARY/HAMMOND 4.9 INDIANAPOLIS 4.1 KOKOMO 5.4 LAFAYETTE 3.9 MICHIGAN CITY 5.6 MUNCIE 5.2 SOUTH BEND 5.0 TERRE HAUTE 5.6 PERSONAL INCOME ($BILLIONS) U.S. 11,1870.0 6.1 INDIANA 204.2 5.4 RESIDENTIAL BUILDING PERMITS INDIANA 1,787 -11 U.S. employment figures are seasonally adjusted. Principal Source: Ball State University Bureau of Business Research.