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Revenue Is For Loser States

By Jesse Taylor
Wednesday, June 25, 2008 20:06 EDT

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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By pams

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