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Seeing through
tax cuts
By Jim Surber
Sometimes, they say, it is hard to see the forest for the trees. And
sometimes it is difficult to determine our best interests when they are
hidden by carefully crafted goals that are in the best interests of
others. This comes to mind with the past and current situations in Ohio
as a new state budget is being assembled.
The crux of this story only appears in bits and pieces in local
government and school financial reports, letters to the editor, and
opinion pieces. It is largely hidden from the public simply because it
is not a single, sensational event.
Ohio’s Governor is asking the General Assembly to again cut state
income tax collections by 15 percent this year and 8 percent in 2016,
while increasing sales and other taxes and further cutting revenue to
locals.
This is not only happening in Ohio, but also in at least nine other
states across the nation. The story began here in 2005 with the passage
of H.B. 66, which eliminated the corporate income tax and reduced state
income taxes by 21%.
In his 2006 State of the State Speech, Governor Bob Taft declared, “At
this time last year we had a tax code that was mired in the distant
past, punishing investment and ignoring innovation. We worked day and
night to bring that code into the 21st Century. We cut the income tax.
We junked the corporate franchise tax. We scrapped the inventory and
equipment tax.”
The promise for these actions was jobs and growth. Opinions vary
greatly as to who benefitted and whether or not it created jobs.
After winning election in 2010, current Governor Kasich successfully
introduced H.B. 153, his “jobs budget,” citing an $8 billion state
deficit and proposing massive cuts to local governments and schools.
In the budget for 2012-13, Ohio lawmakers scuttled the estate tax,
further cutting townships and cities, and dropped revenues by another
$333 million per year. At the same time, funding to charter and private
schools was increased by $567 million. It also increased spending by $5
billion, the second largest increase in state spending in Ohio’s
history.
For another perspective, our national debt incurred by Washington
politicians over nearly two centuries, now stands at $54,620 per
person. The current debt of the State of Ohio ($321 billion) now stands
at $27,836 per Ohioan, which is the fourth highest in the nation.
(http://www.statista.com/statistics/246333/state-debt-per-capita-in-the-united-states/)
In just four years, Ohio has cut over $4.3 billion from schools and
local governments, and increased spending on charter schools and tax
changes by nearly the same amount.
By 2013, state leaders were claiming that the cuts to local governments
worked, the deficit was gone, and the state had a surplus. If you think
that restoring at least part of the local revenue would be in order,
you would be terribly mistaken.
The newly-proposed $72.3 billion state budget promises more of the
same; cutting the state income tax rate while increasing and broadening
the sales tax, and with higher taxes on such things as cigarettes, oil
drillers and used car trade-ins.
A pattern for this policy has become apparent: shift the tax burden,
create a deficit, blame government, defund (part of) government, fund
additional tax changes, repeat. Some contend that this is the
brainchild and goal of the American Legislative Exchange Council
(ALEC), but that is another matter.
The vast majority of Ohioans are more involved making a living and
performing day-to-day responsibilities and activities than concerning
themselves with long-term effects of political actions.
A few facts cannot be debated.
Ohio lawmakers have reduced and are striving to again greatly reduce
the state income tax, with the ultimate goal being its total
elimination. The lost state revenue has been replaced by funds withheld
from local governments and will now be supplemented by higher and
broader taxes on consumption. While local government revenues have been
reduced, state government spending has been greatly increased. These
fiscal actions have all been taken in the name of job creation and
growth.
This has placed Ohio counties, townships, villages and cities in a
position to either abandon services and infrastructure maintenance, or
seek additional local revenue in the form of increased local taxes or
fees. Most taxpayers already believe that they pay too much in taxes.
A few questions should be considered and answered:
Are jobs created based upon an employer’s need and demand, or are they
created when anyone with a good income, whether an employer or not, is
handed a check?
Will across-the-board tax cuts create more jobs than specific, generous
tax cuts to those who create new jobs?
Is wealth redistribution by government inherently bad, or is its
evilness dependent only upon the direction of the distribution?
Do we all benefit by investing in local schools and infrastructure and,
conversely, do we all suffer when we de-invest, or reduce local
funding?
Are we willing to pay higher local taxes to maintain services, roads,
etc.? If not, will we be content paying the same, or possibly more, in
taxes for much less locally?
Do we see the trees, or a forest?
Additional information about this topic can be found here
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