BuckeyeBlog

The Center for Freedom and Prosperity has put out two videos of a three video series to explain the concept of the Laffer Curve — the notion that in some instances tax revenue goes up when taxes are cut. With a lot of muddy thinking surrounding tax rates, revenue, and economic growth, these videos are a great way of learning some fundamental truths about tax policy.

Part I:

Part II:

The Dispatch reports on how Skybus, an economy start-up airline benefiting from some $57 million in government subsidies, has crowded out service to Columbus by other airlines.

I wonder how the Columbus-based employees at Midwest, Delta and JetBlue feel about losing hours and pay, or even their jobs, to Skybus, espcially when the taxes they pay were used to subsidize Skybus and give it a financial advantage over their own employers.

The rest of us will pay a price for this particular government encroachment into the private economy as well. While Skybus may still service the routes dropped by other airlines, Zagat rated Midwest and JetBlue first and third respectively for overall airline quality among economy carriers. Having flown Skybus for business and pleasure, and as many in Central Ohio can attest to, it may be cheap and interesting, but it is not a quality service.

For many traveling to and from Columbus, Skybus would not be their first choice. Thanks to state and local government, however, it is more frequently now their only choice.

Here’s some insights into Governor Strickland’s plan to grow government spending today, while sticking the bill on our children and grandchildren tomorrow:

A Viewpoint by Sam Staley just released;

A couple of podcasts from BuckeyeVoices.org, one where Sam discusses his analysis and another where I give my initial reaction to the proposal;

Finally, my recent debate with a big government advocate on public TV will be posted here shortly.

Kudos to Governor Strickland for admitting that we can live without a good share of state government spending. He comes to this realization when told that there may not be the tax dollars in the treasury to pay for every dime of spending planned through July of 2009.

Of course, true conservatives knew of the needlessness of much state spending independent of a shortfall in taxes to pay for it all.

Strickland says he doesn’t want to raise tax rates to pay for the planned spending, so good-bye spending….we would hope.

Our 2005 Ohio Piglet and 2006 Ohio Piglet should be helpful for the Governor. The reports document more than enough wasteful and duplicative state expenditures that can be cut in order to close the $1.9 billion shortfall presented in the Governor’s worst case scenario.

Our 2007-08 Piglet report is due out in a few weeks to bring our list of pork and waste fully up-to-date.

Here’s a couple of my favorite piggies and potential cuts:

$22.9 million on the Ohio Arts Council. A fine work of art deserves appreciation. But it doesn’t deserve to be subsidized by our tax dollars.

$6.5 million for the Ohio Business Development Coalition (OBDC) and other “brand-building” activities of the state Department of Development. The OBDC runs an expensive ad campaign in national media designed to lure a special kind of CEO to Ohio. Unfortunately the OBDC’s targets are CEO’s who don’t care about high taxes and high government spending — often because they pocket tax dollars themselves.

Turning a silk purse out of the sow’s ear of Ohio’s business climate is better left to private Chambers of Commerce. If the state really wanted to “build its brand” as a place for CEO’s to invest and grow their businesses, it would eliminate the income tax, end compulsory unionization and end the government monopoly of k-12 education services.

$200,000 for the Ohio Film Office (OFO). The OFO was eliminated from the state budget in 2002, but surprisingly the state just reopened the office. The OFO subsidizes the motion picture industry in an attempt to lure producers to film in Ohio. That is to say, it takes your tax dollars and waves them under the noses of Hollywood and Michael Moore and Sean Penn and all the rest to come here and shoot some scenes on location.

To quote one state official trying to justify the OFC: “But we really thought about it from a tourism perspective, of getting Ohio images, our beautiful scenery and locations like the Old State Reformatory at Mansfield, where they filmed The Shawshank Redemption or Columbus, where they filmed Traffic right across from my office, and its really a win-win.”

That’s two-thumbs down on a tourism strategy that uses taxpayer dollars to entice people to Ohio based on our gruesomely retro prisons and nightmarish crack houses.

To be continued…

The News-Herald of Willoughby provides some examples of local government initiative in truly improving efficiency and productivity.

However, this follow up suggestion will run into the reality of public employee collective bargaining:

[School districts] should be open to ideas such as sharing teachers or other personnel whose strengths can help neighboring districts.

We encourage school officials to find ways to trim expenses and remember that doing so helps taxpayers.

The News-Herald should turn the bright light of its investigative reporting on the teacher union contracts as they are negotiated in its communities. The paper will find how school officials - complicit though they may be in negotiating the contracts the way they do - have their hands tied when it comes to really significant cost savings and productivity improvement.

Curtis Dubay of the Tax Foundation discusses his recent report ranking Ohio 46th in state business taxes on our latest Buckeye Voices podcast.

The Tax Foundation’s annual report on business taxation appears to find that the HB 66 tax shift plan so vigorously touted by the outgoing GOP leadership is working: Ohio is now ranked 46th in the nation, up from its 49th ranking last year. Wow! Will wonders never cease?

Seriously, I’ll need to check with Tax Foundation author Chris Atkins about the degree his report captures the phase-in of HB 66’s shift from the corporate franchise and tangible property taxes to the new commercial activity. I think a large part of it is already reflected in this latest report.

If it is, it is yet another confirmation of the fact that the HB 66 tax changes are insufficient to move Ohio out of the bottom 10 states for business taxation, let alone return the state to above-average growth and prosperity.

Can we please put HB 66 behind us and start talking about real tax reform?

The Intelligencer‘s observation from across the river about Ohio tax policies is worth repeating: Companies don’t pay taxes, people do.

Actually, this simple fact bears daily repeating as the Strickland Administration seeks to squeeze more tax receipts from an ailing Ohio economy for more government spending.

Please see our most recent thoughts on this topic on our “Eye on the Statehouse” tracking of the FY 08-09 budget deliberations.