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The
Columbus Dispatch
Just mention the ‘T
word,’ and politicians plug their ears
By Joe Hallett
Sunday, March 27, 2011
Having a civil and rational discussion about taxes has been impossible
for a long time.
Both political parties rip anyone who even hints at a tax increase. The
disconnection between services and the need for taxes to pay for them
is so complete that state residents have become deluded into believing
there really is a free lunch.
Gov. John Kasich truly believes that low taxes and less spending at
every level of government are crucial for job growth and a return to
prosperity. His way deserves a chance to work.
With the state’s loss of more than 600,000 jobs over the past decade,
there is merit in trying something different from the tax-more and
spend-more policies that have been the Statehouse’s default response to
almost every budget crisis over the past 40 years.
Despite Kasich’s sureness in his plan, there is room for skepticism.
When a Republican governor and legislature enacted sweeping tax reform
in 2005, including a phased-in, five-year, 21 percent state income-tax
cut, business groups forecast thousands of new jobs. In fact, Ohio lost
nearly 400,000 jobs and state government coffers were deprived of about
$2 billion a year.
Given that experience, I asked Kasich last week, why should Ohioans
have faith that what he wants to do will restore prosperity? A lecture
ensued about how Ohio’s taxes are still too high to attract jobs.
“Let’s raise our taxes,” Kasich said, facetiously. “That’s really going
to work for us. What are we going to do with the money we raise? What
is it you want to spend it on? Seriously. You want to give more to
local governments? Is that going to get businesses in here?”
Referring to higher taxes, he said: “I don’t even know what we would do
with the extra money.”
Local schools and governments, universities and advocates for the poor,
elderly and mentally ill - all of whom are facing deep cuts in Kasich’s
budget - probably could find uses for it.
Kasich’s response was indicative of how any questioning of tax cuts too
often is derisively dismissed. Alternate points of view deserve to be
heard, including those arguing that raising revenue to invest in the
education, health and safety of residents promotes a better society.
Kasich correctly notes that excluding wealthier Ohioans from the 21
percent income-tax cut would hurt small-business owners and squelch job
growth. But there also is credence to the argument that the rich are
disproportionately benefiting from the tax cut amid a shifting of the
tax burden to middle- and lower-income earners.
That conclusion was reached separately by Jack Frech, Athens County’s
longtime welfare director, and Jon Honeck, a Ph.D economist for the
Center for Community Solutions, based in Cleveland.
Using state tax tables, Frech found that the top 2 percent of Ohio
wage-earners, those with incomes of more than $200,000 a year, made
more than $105 billion in 2008. That was 32 percent of all income and
easily more than the $98 billion earned by the 73 percent of taxpayers
who made less than $60,000 a year.
The tax tables show Ohio’s wealth disparity growing: From 2000 to 2008,
overall wealth of taxpayers increased by $63 billion, of which $36
billion, or 57 percent, went to the top 2 percent. During roughly that
same period, another 362,000 Ohioans fell into poverty, Frech said.
Kasich’s pending program cuts “will hurt Ohio families most in need,
while the richest households have seen the greatest benefit from the
tax cuts,” he said.
In a March 7 report, Honeck suggested restoring the top rate of the
state income tax to its 2004 level of 7.5 percent from the current top
rate of 5.925 percent. Such a move, he said, would yield about
$500million more in 2012 to help restore services for Ohioans who need
them most.
“Especially after a deep recession, additional revenue should come from
those most able to pay,” Honeck said.
Making that argument or any utterance of support for a tax increase
will get you pilloried. Flak jacket fastened, I await your emails for
even broaching the subject.
Read it at the Columbus Dispatch
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