Thoughts on Ohio's Climb to the Top
The table on the reverse side shows that in the course of a generation, Ohio has climbed to the highest rungs of the tax burden ladder in this country. Once a low tax state, Ohio has raced past forty-one other states and now ranks fifth in state and local taxes measured as a percent of income. No other state in the nation has increased its relative tax burden as greatly over the past thirty-five years.
Does this matter? It does if you accept this economic truth: The more you tax something, the less you have of it. In the case of the Tax Foundation data
presented here, the ‘something’ that is taxed is quite simply the sum of economic activity occurring in Ohio. The more we tax economic activity, especially in comparison to other states, the less of it we will enjoy here in Ohio.
Less ‘economic activity’ is a sanitized way of saying our climb up the tax burden ladder has meant fewer jobs, less wages for those lucky enough to have jobs, and less opportunity for our state’s citizens to realize the prosperity their talents and effort could afford them elsewhere. There are consequences of having less of each of these benefits of economic activity. They include more unemployment, more broken families, more criminal activity, more drug use, more flight of brainpower and youthful energies, more bankruptcies and more school dropouts, just to name a few issues at stake in our state and local tax policies.
Some try to turn the truth about the consequences of taxes on its head. They say that taxes and government spending are a necessary ingredient for growing an economy, that the spending decisions of politicians and bureaucrats are an ‘investment’ that builds the capacity of our economic infrastructure.
By making this claim the tax-and-spenders try to deny a second economic principle. When the citizens of Ohio are able to keep more of the reward of their talents, ambitions and industry, far more good is done for the state’s economy than is caused by a similar amount of spending routed through, and paying for, the political classes which run government. This truth should be self evident: just look at what our politicians have to show for their management of our state’s economy after leading us up forty-one steps on the tax burden ladder.
The debate needs to focus on why we are not cutting taxes. Jobs continue to leave the state yet the size and cost of government continues to grow. Ohio can compete for new jobs and higher incomes only if lawmakers follow the positive examples set by Florida, Tennessee, and Texas and eliminate state and local income taxes. Citizens in these states enjoy a higher level of economic prosperity and freedom than do Ohioans. State and local income tax elimination would take Ohio’s tax burden down from 12.4 percent to 9.3 percent and tie Texas for the eighth lowest tax burden in the nation. The move would give our state’s economy a much needed boost.
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David Hansen is the President of the Buckeye Institute, a nonpartisan policy research organization based in Columbus, Ohio.
