UPDATE:
I have received a letter from the Indiana AG's office. It stated that they reviewed the case and have opened a file on the matter. Further, they stated that they were referring it to their mediators for resolution. Shortly after this I received a letter from the mediator assigned to the case stating that she had sent a letter to Dish about the matter. Magically, the following day I was contacted about the complaint from a representative of Dish Network's "executive resolution team" offering to credit my account for the amount of the tax on the $35 discount for the first year. I accepted their offer.
Obviously, this settles the matter for me. They maintain that the tax collected is correct and that the full amount is sent to the State. I don't doubt that they do so. However, this doesn't resolve the matter for everyone else who is paying this. The AG must have thought my argument had some merit or they would have simply told me I was incorrect and that would have ended it. I have contacted the Indiana Dept. of Revenue about this as well. I have not yet received a reply from them.
Dish has solved my issue and I am satisfied with the resolution. Admittedly it is a small amount of money to raise a stink over, but when it is a tax, I don't want the government to get a penny more of my money than necessary. I will report back when I hear from the IDOR.