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Next entry: And You Will Know Us By The Trail Of Cristal Previous entry: Ohio: ‘Christian’ woman’s ‘Obama is a baby killing Arab’ smear

Revenue Is For Loser States

Economy

imageThe state of Ohio is tight on cash, and one of the big fights that’s consuming the statehouse is how to continue paying for things.  State Rep. John Sidney (R-Sidney) has the simplest solution, which is to apparently stop.

For 36 years, Ohioans have been sending a portion of their paychecks to the state—an act that cost the median filer $619 in 2005.

Some Ohio lawmakers say it’s time to let Ohioans keep that money.

“To me, it just seems pretty logical,” said Rep. John Adams, R-Sidney. His House Bill 534 calls for phasing out the state income tax over 10 years. “I’m going to keep pushing it because I don’t foresee the economy getting better in Ohio. I only foresee it getting worse.”

The state income tax composes about 43% of the state’s revenue, which is to say that it’s a rather important mechanism for paying for shit.  Adams continues on down the line of doctrinaire supply sideism - the state’s economy will grow so fast without the income tax that we won’t need to replace the revenue with anything!  Of course, where all those new people go (brownfields or bust?) is an open issue, but what’s funny is that not even this small group of fiscal titans can actually agree what the hell happens after the tax is cut:

Adams also argues that Ohio could eliminate the income tax without replacing the revenue because the state economy would grow fast enough to compensate. “Where I come from, you don’t replace a tax with another tax,” he said.

But not even some of his bill co-sponsors believe that. “Certainly there is going to have to be some replacement revenue for us to be able to move forward,” Hottinger said.

Church agrees. “If it were that simple, we’d have policy levers that were easily understood that we could yank on and rocket Ohio back to prosperity,” he said.

Indiana, Pennsylvania and Michigan all have lower income-tax rates than Ohio, but that hasn’t spared their economies from tough times. Since Ohio’s mid-2005 income tax cut, Ohio has had a net loss of 21,000 jobs.

Again, the supply-side way: take a hard-nosed look at stark economic realities, and then decide to cut taxes regardless.  Incidentally, two of the top ten fastest growing states in the country, North Carolina and Oregon, also have some of the highest income tax rates around.

Must be voodoo.

 

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Posted by Jesse Taylor on 04:06 PM • (49) Comments

“Where I come from, you don’t replace a tax with another tax,” he said.

Who the hell gave La-la Land representation in the Ohio legislature!?

Comment #1: Sarcastro  on  06/25  at  04:55 PM

if i recall from when i was interested in moving to oregon, dont they have a minimum wage much higher than the national level too? its almost as tho crazy liberal ideas make for a better quality of life! *gasp*

Comment #2: jessilikewhoa  on  06/25  at  04:57 PM

“I’m going to keep pushing it because I don’t foresee the economy getting better in Ohio. I only foresee it getting worse.”

...which proves that sometimes you really have to work hard to get your self-fulfilling prophesies to come true.  People just don’t seem to realize how difficult it is to ruin a whole state…

Comment #3: MikeEss  on  06/25  at  05:08 PM

Re Oregon: they have an income tax but NO sales tax.  Sounds pretty progressive to me.

Comment #4: NobleExperiments  on  06/25  at  05:13 PM

I’m gasping for breath over here. Really? We’re going to cut nearly 50% of our revenue and just… hope for the best? Really???

It will be sad, however, when infrastructure starts collapsing and people die. Not to mention the uneducated populace when the schools have no more teachers…

Comment #5: Faye  on  06/25  at  05:19 PM

You know, here in Washington state, we don’t have income tax but we do have sales tax.. I am near the Oregon border, and people around here consider the two taxes to be fine, you can have one, but not the other.
I really don’t mind paying taxes.. I like schools, and roads, and all that other good stuff… So I guess I wouldn’t mind an income tax too.
However, when I moved from Oregon to Washington, I do remember thinking how much bigger each paycheck looked..

Comment #6: Yazikus  on  06/25  at  05:20 PM

Which is why I’m moving to Oregon in a week. Though, for the record, Georgia (where I live until Tuesday) manages somehow to have both an income tax and a sales tax and still not be able to do anything. So there’s somethign about governance and what you do with taxes in there, not just whether you should tax or not tax.

Comment #7: Keith  on  06/25  at  05:28 PM

There are meaner Republicans in the South, but I do believe that here in Ohio we take the prize for having the stupidest Republicans in the country. There are plenty more where this moron came from.  (Having term limits in the legislature helps; even if they’re capable of learning anything about how stuff works, they’re gone by the time they’ve managed to absorb it.)

Comment #8: Steve LaBonne  on  06/25  at  05:34 PM

So there’s somethign about governance and what you do with taxes in there, not just whether you should tax or not tax.

Exactly. Here in Florida, we have sales and property taxes, but no income tax. The combination of a “cut the property tax at all costs” mentality with a housing slump means everyone is getting hosed right now at the state level—park closings, openings in the police department not being filled, cutbacks in education, both higher and K-12.

Comment #9: Incertus, Nacho Daddy  on  06/25  at  05:39 PM

Right on, Steve LaBonne!  We definitely seem to have more than our share of pols from the shallow end of the gene pool here in Ohio. As someone who drives over the main ave. bridge in Cleveland twice a day, five days a week, I reeeeaaally hope this dumbass’ plan isn’t enacted.

Comment #10: Bill in OH  on  06/25  at  05:48 PM

I know that an extra $619 a year is all that stands between me and starting a new business that will employ hundreds of skilled laborers.

Comment #11: Cris  on  06/25  at  05:55 PM

“Who the hell gave La-la Land representation in the Ohio legislature!? “

The RNC?

Comment #12: AlanB  on  06/25  at  05:59 PM

So has any of these “supply-side” financial geniuses ever been asked one simple question:

You believe tax revenues go up as the tax rate goes down.  Laffer’s “brilliant insight” was that if the tax rate is increased toward 100%, tax revenues will fall at some point because people will stop working.

So if the tax rate is 100%, there will be no tax revenue.
And, obviously, if the tax rate is 0%, there will be no tax revenue.
But if the tax rate is somewhere in between, there will be tax revenue.

As the tax rate is reduced toward 0%, at what point does tax revenue stop rising?...

Comment #13: MikeEss  on  06/25  at  06:01 PM

Here in VA, Republican Jim Gilmore was elected governor in 1997 on a platform of eliminating the property tax on cars, while replacing it with nothing because “economic growth” would pay for it all. He ran transportation funding into a ditch, forced the state universities to raise tuition while cutting their budgets, and more, and lied about the extent of the damage, telling the legislature before he left office that the state was half a billion dollars in the hole, and when all was said and done it turned out to be two billion.

Now he’s about to badly lose a Senate race to his successor, Mark Warner, and he and his supporters are claiming that the state’s finances were in fine shape when he left office, and the tax increases that were part of the deal Warner negotiated with the Republican legislature were completely unnecessary. (That would be the deal and subsequent masterful management that resulted in Warner leaving office with 70% approval ratings.)

And through all this, the new generation of Republicans who have taken control of the party are still convinced that everyone really hates taxes above all else no matter how many elections they lose. The answer is always that they haven’t been anti-tax enough. With any luck, they’ll work themselves into a minority that’ll last until the current crop of wingnuts die of old age; they don’t show any signs of being capable of learning.

Our Republicans can be pretty mean (though no competition for the deep South), but on stupidity, they can compete with any GOP in the country.

Comment #14: Redshift  on  06/25  at  06:07 PM

No, I think Nevada has the most stupid Rethugs of all, but Ohio does give them a run for the money (so to speak).  We have the worst Governor evah!  Even worse than Taft, which is hard to believe.  Why not ask this idiot from Ohio to take a look at Nevada as a model of what happens when you only have one limited source of revenue (gaming tax) and no other sources….when the economy tanks, so does government.  Wouldn’t be surprised to see chaos and mayhem in the streets here in NV if they cut the budget as drastically as is being contemplated.  Say goodbye to education, too, both primary and secondary.  But hey, at least all our billionaires will still be able to afford their luxury lifestyles.

Comment #15: kingchazs  on  06/25  at  06:24 PM

I think its incorrect to accuse them of stupidity.  It’s not.  What it is a desire for Norquist’s dream of a government small enough to drown in a bathtub, as that’s exactly what they intend to do, because once they manage to get rid of the government and all its annoying rules around fairness and decency, they intend to be lord and master over all you peasants. 

Its grotesquely evil, but don’t mistake that for stupidity.

Comment #16: Drocket  on  06/25  at  06:49 PM

Drocket-

What was that rule?  Never assume malice when incompetence will suffice?

Comment #17: Antigone  on  06/25  at  06:55 PM

Oh, and Henrietta?  A late-term abortion is one that happens after 24 weeks.  20 weeks is not a late-term abortion.

Comment #18: Mnemosyne  on  06/25  at  06:56 PM

D’oh!  Wrong thread!

I hate when that happens.  Stupid Safari.

Comment #19: Mnemosyne  on  06/25  at  06:56 PM

“take a hard-nosed look at stark economic realities, and then decide to cut taxes regardless.  Incidentally, two of the top ten fastest growing states in the country, North Carolina and Oregon, also have some of the highest income tax rates around. “

During Reagan’s Supply-Side Era of the ‘80s, the population nationwide increased LESS (9.8%) than in any other decade near it.  Even if you were to blame the start of the ‘80s on Carter, the numbers are still ugly for years in. (The ‘70s, the “horrible” era of Nixon who’d be comparably moderate today, of “RINO” Gerald Ford, and of Jimmy Carter, saw an 11.4% increase; and the ‘90s with “No New Taxes” Bush41 and Clinton saw a 13.2% increase.)

People were not ready to have children due to the lack of job growth, and I suppose that also means that Ronaldus Maximus was (gasp!) not able to slow abortion and contraception.

Ohio had net losses of population during many years in the 80s—more under James Rhodes, while Dick Celeste stopped the bleeding somewhat.  The supply-side regime produced a net growth of 0.5% for the 1980s in Ohio, and a loss of 2 electoral votes.  This decade looks good by comparison (we still have the ~11th fastest growing county in the nation in Delaware Co.,) and the 1990s look phenomenal (4.7% increase.)

Comment #20: calvinhobbes  on  06/25  at  07:02 PM

“Wouldn’t be surprised to see chaos and mayhem in the streets here in NV” - You don’t visit between Koval and Maryland very often, do you. Or any of the neighborhoods surrounding downtown. Or the pockets of no-lease housing like Siegel Suites and their ilk.

I have lived in Las Vegas since ‘83 and we said goodbye to education in the early 90s. Education is so bad here that at one point last year, the teachers union was seriously considering joining the Teamsters. Yup, those same Teamsters who sold out the organized crime syndicates because Wynn and Kerkorian offered them better deals. Talk about an education system that would feed the gaming industry!

Comment #21: jed  on  06/25  at  07:05 PM

“I’m going to keep pushing it because I don’t foresee the economy getting better in Ohio. I only foresee it getting worse.”

So this is, what, the coup de grâce? You’re just putting it out of its misery?

Adams also argues that Ohio could eliminate the income tax without replacing the revenue because the state economy would grow fast enough to compensate.

“Sure, we’re selling at a loss, but we’ll make that up in volume.”

Comment #22: Sophist FCD  on  06/25  at  07:09 PM

Here in MA, a referendum to eliminate the income tax almost passed. The argument here wasn’t that the taxes would be replaced by other taxes in a growing economy, but that the state would be easily able to cut the necessary costs out of the state budget. After all, most of government spending is waste. Right?

Comment #23: JohnL  on  06/25  at  07:24 PM

Where *I* came from, Nevada, there wasn’t a state income at all. Everything was fine and dandy so long as the economy was booming, but the very second it faltered everything went in the pooper. Unless Ohio has reason to believe that it can successfully cultivate gambling or some like enterprise to replace its income tax, and then tax it at an enormous rate, this proposal looks highly dubious.

Comment #24: Sara Pulis  on  06/25  at  07:32 PM

*What was that rule?  Never assume malice when incompetence will suffice? *

Quite true.  We have, however, gone a LONG way past incompetence sufficing.  Beyond that, you have to ignore the fact that they tend to all but come out and tell you their plan every now and again.

Comment #25: Drocket  on  06/25  at  07:39 PM

Gah.  What are they thinking!?
I live in lovely Tennessee, which has no income tax and ridiculous sales tax (aka “reverse tax”, as in the poor get hit harder proportionally).  We have (I think) the second-worst public school system in the country, lousy public support systems (Medicaid, welfare, etc.), and all-around crummy stuff, like sidewalks in poor repair and so on.  And people STILL complain about the cost of living.  Having moved from central New Jersey, where the income and property tax are really, really high, but there is no tax on food or clothing under a certain limit, I can see the difference.  Good schools, decent public services, decent parks, etc.  Again, what are they thinking?

Comment #26: turbodillo  on  06/25  at  07:51 PM

“Again, what are they thinking?”

Sounds like Tennessee is well on its way to becoming a Republican paradise.  After all, why should all the banana republics be in Central America? 

So as far as Republicans and “what are they thinking”?  “More Please!”...

Comment #27: MikeEss  on  06/25  at  07:59 PM

Unless Ohio has reason to believe that it can successfully cultivate gambling or some like enterprise to replace its income tax, and then tax it at an enormous rate, this proposal looks highly dubious.

Heh. The same tards who want to eliminate taxes without replacing them are ALSO sworn enemies of legalized gambling- which is available in every neighboring state. Kiss those Ohio $$ goodbye!

Comment #28: Steve LaBonne  on  06/25  at  09:10 PM

“So if the tax rate is 100%, there will be no tax revenue. “

Not even that part of what I call the Laughter Curve is true. The Soviet Union and the former Communist block countries had effectively 100% tax rates. Yet they still got revenue. I mean, somebody paid for all that military equipment!

Not saying 100% is a good rate (it isn’t) but it does not mean zero revenue.

Comment #29: Ben D.  on  06/25  at  09:17 PM

Who needs taxes?  Ohio is going to invest all its money in rare coins and fund state government out of the profits, right?

Comment #30: rea  on  06/25  at  10:24 PM

So basically, his plan really, honestly, and truly is:

1.  Cut taxes

2.  ?

3.  Profit!

Comment #31: Dweeze  on  06/25  at  11:10 PM

Here in OR we have no sales tax which seems to cause the Repukes endless heartburn. There have been a number of proposals in recent years to replace the income tax with a sales tax, none of which have, so far, gotten far enough to be voted on. Even though the wingers claim the change would be revenue neutral — we’ll make up the difference with sales taxes collected from out-of-state visitors — I’ve never understood how they could possibly manage to do so. (The more likely explanation is that they’re lying, but they’d never do that, would they?)

The last time one of these proposals popped up, I did a quick back-of-the-envelope calculation to see how my taxes would be affected, given the sales tax rates that were being proposed. Not surprisingly,  my taxes would be reduced. Hooray for me, right? But the proposal is supposed to be revenue-neutral so the extra tax money has to come from somewhere. Out of curiosity I calculated how much I’d have to spend to pay the same amount of sales tax as I did in state income tax the previous year. If the state applied sales tax to every purchase (including food and medicine, two classes of goods that most states exclude from sales tax) I’d have to spend more money than my gross income, and if they exempted food and medicine from sales tax I’d have to spend even more. Even during the HELOC-fueled spending boom, that seemed like an unsustainable situation.

“Yes,” said the wingers, “but the boom in sales tax revenue from out-of-state visitors would make up the difference and allow us to have a low sales tax rate.” At which point I suspected that they were a wee bit delusional about the amount of money spent by out-of-state visitors.

It’s possible that my math was wrong, but being a typical Republican tax <strike>plan</strike> scam it’s more likely that the result would be to massively benefit the people at the top, screw everyone else, and force huge state spending cuts. Of course in Wingnuttia that’s called “Mission Accomplished.”

Comment #32: cohumulone  on  06/25  at  11:47 PM

”“Yes,” said the wingers, “but the boom in sales tax revenue from out-of-state visitors would make up the difference and allow us to have a low sales tax rate.” At which point I suspected that they were a wee bit delusional about the amount of money spent by out-of-state visitors.”

Everybody probably visits there from Washington and California to shop because there’s no sales tax. Unless I’m underestimating the allure of Crater Lake.

Comment #33: Juan Stoppable  on  06/26  at  12:54 AM

Out here on the prairie, we hear some mighty interesting ideas from time to time, and sometimes their a little spooky in the noodle, as we say here in Lutefisk country.  Now we cut some spending on some services out here on the prairie, and then the 35W bridge collapsed.  Everyone talked about that one for a while, and there was all kinds of sympathy, but the point seems to have escaped a lot of people’s minds.  See, when you stop spending, you often stop spending on things like bridges.  Then the bridges start falling down and people’s family members start falling down with them while driving on the bridges and then everybody says, “Oh yeah, that’s what we were spending the money on.  Gee, we’re gonna have to rebuild that thing.  Can’t rebuild Aunt Ida, of course, but then she wasn’t my aunt.”

Seems like every great Republican idea is accompanied by the needless deaths of citizens.  Anyone else notice that?  I mean, some of you folks are from the big city and ought to have caught that part of things without a prairie feller like me pointing it out.  Then again, you folks haven’t had the benefit of a governor like Tim Pawlenty.  Now Governor Pawlenty was fine on the matter of buying prescription drugs from Canada.  I’ve heard many people quote his “Show me the dead Canadians” line to great effect.  But he’s not so good on bridges falling down.  One thing about those bridges, when they fall down, it makes an awful mess.  Now I’ve driven across Ohio and I thought it was a pretty nice state.  It had some of the best highway service areas I’ve ever seen.  But I can tell you from experience that although those Ohioans are gonna be happy as can be about that $619 a year, they’re not gonna be so happy when their bridges start falling down and the rest of the infrastructure starts collapsing.  Then they’re gonna start looking for someone to blame, and by then those Republican state legislators will all be somewhere else, because while the median filer may get $619 back, I wouldn’t be surprised if the median Republican state legislator gets a whole lot more than that and can leave town whenever it is convenient.

Maybe that’s the statistic they should have included in that article.  What does the median Republican state legislator pay in state income taxes?  I’d be curious to know that figure myself.

Comment #34: DBK  on  06/26  at  01:28 AM

I’d wondered why my hotel bill in Tennessee was so much higher than advertised…

Comment #35: Kerlyssa  on  06/26  at  02:13 AM

Antigone: Never assume malice when incompetence will suffice?

Any sufficiently advanced incompetence is indistinguishable from malice.

Comment #36: inge  on  06/26  at  07:39 AM

“Any sufficiently advanced incompetence is indistinguishable from malice.”

...which should be the epitaph for the Cheney/Bush administration…

Comment #37: MikeEss  on  06/26  at  08:57 AM

I grew up in the great state of New Hampshire, which has neither a sales tax nor an income tax.  What they do have is a really high property tax.  You’ll note that New Hampshire is not exactly booming, though the state run liquor stores (www.nh.gov/liquor) seem to do a brisk out-of-state business.
I now find myself pretty much completely unable to understand the concept of sales tax.  The state I live in now has all these weird rules… like clothing is taxed, unless the item is under $50.  I think this is a good and reasonable rule, but it confused the hell out of me until someone explained why some things on my bill were taxed and some weren’t.

Comment #38: LauraB  on  06/26  at  10:05 AM

Wait, what?  Not everybody has to pay income tax, wage tax, sales tax (plus a surcharge tax on booze) and property tax?

Hm.  Perhaps Pennsylvania should look into streamlining its tax structure.

Comment #39: Pansy P  on  06/26  at  10:33 AM

Are we all in agreement, then, that anybody who pompously starts of their point with “Where I come from, you ...” is really saying “I’m a brain-dead hick impervious to facts, especially facts which contradict my ignorant opinion, which is….”.

Agreed?

Comment #40: seeker6079  on  06/26  at  10:35 AM

grrr… starts off

Comment #41: seeker6079  on  06/26  at  10:44 AM

Juan Stoppable: Nah, it’s the undeniable allure of EveryDay Music and Powell’s Books…

Comment #42: Ab_Normal  on  06/26  at  11:39 AM

Pansy P, the weirdest thing about PA (besides your traffic rules) is the case law on beer. I just don’t get why you have that. Does it benefit the Yuengling family or something?

Comment #43: Ben D.  on  06/26  at  01:04 PM

Actually, Ben D., I disagree with you on the “weirdest thing”.  I used to drive through PA and the weirdest thing about it was its policing.  Despite having high-crime cities like Pittsburgh and Philly the state seemed to think that the best use of its police resources was having a trooper under every frackin’ overpass.  That was a while ago, but it struck me as completely and utterly ludicrous.  It’s as if the State read Dick Turpin and decided, “wow!  wouldn’t it be cool if there were that many highwaymen in Pennsylvania, and they were all tax collectors disguised as cops!  coooooooooool!”

Comment #44: seeker6079  on  06/26  at  02:00 PM

“Show me the dead Canadians”

That was Governor Pawlenty? Odd.  I always thought that such a line was reserved for paralyzingly stupid British generals incompetently commanding Canadian troops in previous world wars.  I’m sure that Haig had it tattooed on his ass.

Comment #45: seeker6079  on  06/26  at  02:06 PM

Ben, they’re actually in the process of (attempting to) legalizing the sale of six-packs.  The distributors, who sell beer by the case, are furious, arguing that it will somehow drive prices up.  Since a six pack can only be purchased at a bar and at a very, very limited number of other stores, they’re like $10-$20 right now, so that argument isn’t terribly convincing.

Which is to say, it’s not case law, it’s legislation. I’m pretty sure someone some time thought that forcing people to buy beer by the case would cut down on alcoholism.  Because alcoholics only drink 6 packs.  Or something. You can still by 30-ounce bottles of Yuengling, oddly.  And forties.  Just not 6 packs.

Seeker, there are some very poor areas in the central part of the state and they make a lot of money off ticketing out of towners. I got a ticket in a small town in the Poconos because (we assume) I was the only Honda within 100 miles and screamed out of towner.  So I got a $10 ticket with $90 in fees that went directly into the small town’s pocket.  And the state police patrol the state highways.  The local police (like the Philadelphia and Pittsburgh cops) patrol their respective areas.  You want to see crazy speeding tickets, drive to the beach in Delaware. It’s unreal.

Comment #46: Pansy P  on  06/26  at  03:28 PM

Ahem.  Sorry for getting a bit off topic.

Comment #47: Pansy P  on  06/26  at  03:28 PM

“We’re going to cut taxes whether those bureaucrats in the state Capitol like it or not!”

—Mr. Burns

Comment #48: Bitter Scribe  on  06/26  at  04:46 PM

Anti-tax jerkwads have, through 40 years of enormous propaganda budgets, put themselves in a win-win position. If they don’t manage to cut taxes, they have a ready-made victimization speech, and if they do, they run the government into the ground and leave the sensible people to pick up the pieces (whereupon, as noticed above, they attack them for raising taxes).

Comment #49: paul  on  06/26  at  10:09 PM
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