Policy Report: Should Ohio Limit Government Spending and Taxes?
Abstract
The state and local tax burden on the average Ohioan has risen dramatically over the past twenty-five years. By most accounts, Ohio has evolved from a state with one of the nation’s lowest tax burdens to a state with one of the highest, with significant consequences.
One possible solution to this problem is for Ohioans to adopt a Tax and Expenditure Limitation, or TEL. These limitations exist in 27 states and have been effective in restraining state and local government spending under the right conditions.
The experiences of these and other states suggest to Ohioans that there are three requirements for an effective TEL: the TEL should be part of Ohio's constitution and limits should not be amended without approval of voters; state government spending and revenue growth should be limited to inflation plus population growth (not personal income growth); and surpluses should be automatically directed to a rainy day fund or, over certain minimum thresholds, refunded back to taxpayers.
Russell S. Sobel, Ph.D., is associate professor of economics at West Virginia University and director of the university's Entrepreneurship Center.
Robert A. Lawson, Ph.D., holds the George H. Moor Chair of Business and Economics at Capital University in Columbus, Ohio. He is also a member of The Buckeye Institute’s Board of Academic Advisors.
Barry W. Poulson, Ph.D., is a senior fellow at the Independence Institute and a professor of economics at the University of Colorado, specializing in public finance, development economics and economic history.
Joshua C. Hall is a senior fellow at The Buckeye Institute. He was a staff economist with the Joint Economic Committee of Congress before serving as the director of the Center for Education Excellence and then director of research for The Buckeye Institute.
