BuckeyeBlog

Since we will be celebrating American independence tomorrow, where the theme of “no taxation without representation” played prominently, this video illustrating the opressive nature of high tax rates seems appropriate:

The folks at the American Lung Association’s Ohio chapter are calling for an increase in taxes on tobacco products such as smokeless tobacco and cigars in order to fund their anti-tobacco efforts. This comes on the heels of the Governor and General Assembly de-funding the Ohio Tobacco Prevention Fund and using its money for “economic stimulus.”

But can increased taxes on these products be justified as anything other than anti-smoking activists looking for ways to keep their jobs? I discuss this issue in some detail in my study on Ohio’s Dumb Taxes. I also sum up the issue in this Viewpoint:

It is certainly fair that people should pay for the costs they impose on society. Tobacco users are already doing that, however. Studies indicate the burden smokers place on taxpayers could be oft-set by adding about 32 cents to a pack of cigarettes. Since Ohio taxes cigarettes at $1.25 a pack, the smokers of Ohio are paying for more than their fair share.

Cigars and smokeless tobacco products are also taxed heavily compared to the cost they impose on society. Illnesses from cigars and smokeless tobacco such as chewing tobacco cost taxpayers almost nothing. These products are just not as dangerous as cigarettes. Because of this, they should have no special taxes levied on them. Instead, they have an onerous ad valorem tax imposed by the state that taxes these products based on their price. This distorts the market and unfairly penalizes high-end products.

In short, tobacco users already reimburse the government for any costs imposed on state health systems. If activists were really interested in fairness, they would be pushing for a reduction in tobacco taxes.

Of course, fiscal fairness is probably only one part of the rationale to increase tobacco taxes. Many interest groups want to see taxes raised in order to discourage tobacco usage. It is an improper use of the tax code to try and affect social policy, though. Taxes should be levied to raise revenue for government obligations, not as a way to force people to act certain ways.

Besides being an improper use of the tax code, raising taxes on products to discourage their usage also has unintended consequences. Activists do not seem to realize that not all tobacco products are equally unhealthy. While all tobacco products pose some health risk, smoking cigars or using chewing tobacco causes far fewer health problems than smoking cigarettes. By raising the cost of these less dangerous products the anti-tobacco activists may well cause some people who used these products to satisfy their tobacco habit with cigarettes.

Here’s a good story with a nice transparency angle, holding to account recipients of "taxpayer money ."

It happens to be a charter school, and charter schools indeed should be held accountable. Of $2 million, $54,000 was undocumented. That doesn’t mean anything untoward, except that the records aren’t in accord with standards.

Lots of good stuff here, albeit of the eat-your-vegetables variety. What are the applicable standards; what is the total budget; the percentage or efficiency of inadequate documentation, the "cruel commas" effect of adjectives–lots and lots of good stuff to chew on. That, and the main theme of the story, let’s hold charter schools to account.

Just one thing. Can we count on our friends in the news industry to use that nice phrase "taxpayer money" in all situations of government spending, including public district schools, or only when it fits an agenda?

While it is trendy for liberals to talk about the evils of corporations, an economist in the New York Times points out that one of the best ways to help workers is to lower the corporate income tax:

…a corporate rate cut would help a lot of voters, though they might not know it. The most basic lesson about corporate taxes is this: A corporation is not really a taxpayer at all. It is more like a tax collector.

The ultimate payers of the corporate tax are those individuals who have some stake in the company on which the tax is levied. If you own corporate equities, if you work for a corporation or if you buy goods and services from a corporation, you pay part of the corporate income tax. The corporate tax leads to lower returns on capital, lower wages or higher prices — and, most likely, a combination of all three.

A cut in the corporate tax as Mr. McCain proposes would initially give a boost to after-tax profits and stock prices, but the results would not end there. A stronger stock market would lead to more capital investment. More investment would lead to greater productivity. Greater productivity would lead to higher wages for workers and lower prices for customers.

Populist critics deride this train of logic as “trickle-down economics.” But it is more accurate to call it textbook economics. Students in introductory economics courses learn that the burden of a tax does not necessarily stay where the Congress chooses to put it. That lesson is especially relevant when thinking about the corporate tax.

(more…)

Remember when they made fun of Ken Blackwell’s proposal to privatize the Ohio Turnpike?

Pennsylvania just raked in nearly $13 billion for its turnpike. Ohio probably wouldn’t bring as much, being a bit removed from the east coast, but then again, there’s quite a little bit of transport comin’ through the heartland.

What do you suppose, say, $8 billion or even $10 billion would do for the Ohio capital budget? Heck, let’s make it $4 billion. Think of all the Third Frontier money we could give to private companies!

I couldn’t let this quote from Wellesley economist Chip Case slip by:

“The government has got to do something.”

I remember as a student at Michigan that some group or another had a sit-in at the president’s office. They left when he promised, quote, to do something, end quote, about their issue.

This is poor journalism on NPR’s part. It’s one thing to assemble quotes, but they ought to be fair, in context and meaningful.

The statists love to pretend that taxes don’t matter in location decisions. Au contraire, my friends. As the Wall Street Journal reports ($, or provided here, for educational purposes), no less a liberal icon than Howard Metzenbaum found his way to an estate- and income-tax free state.

Sure, the weather in Florida is nicer than Ohio and that’s a reason people move there. But unless global warming turns the North Shore into another South Beach in terms of climate, Ohio is going to have to change its tax policies dramatically if we want it to be a place people, even liberals, come to, instead of flee from.

Okay, now I’m afraid.

While Marc Dann was copping a feel, er, plea, the real news was a few blocks north at the Arena Grand movie theater, where about 400 people in pretty expensive suits were discussing Managing a Changing Climate: Challenges and Opportunities for the Buckeye State.

The entire political, industrial, legal and accounting world is planning on moving forward with laws that could readily rewrite the world, including plans for a Carbon Market Efficiency Board.

If we’re lucky, the board would act like the Federal Reserve and would do relatively few things; basically, establish a gross amount of carbon pollution, if pollution it be, and thereby enable trading in the right to emit the stuff. Of course, the sense of that depends upon whether it is sensible to consider carbon a pollutant. Apparently the real tragedy of the commons is that everything is capturable now.

But we won’t be so lucky as to have such a board merely establishing property rights. Instead we’re going to get politicians playing Lilliput, tying us down until we can’t emit.

And meanwhile, they’ll be jetting around the world collecting awards for it.

Cheers to 19 state representatives who have proposed to eliminate altogether Ohio’s individual income tax, applicable also to trusts and estates.

No committee assignment yet and no formal analysis of the bill has been prepared by the Legislative Service Commission — a dollar says those things won’t happen — but credit is due to these 19 leaders. It’s the biggest free-market idea out of the Ohio General Assembly since vouchers.

The honor roll:

John Adams, R-Sidney

Thom Collier, R-Mount Vernon

Arlene Setzer, R-Vandalia

Jeff Wagner, R-Sycamore

Tom Brinkman, R-Cincinnati

Matt Dolan, R-Novelty

Matt Huffman, R-Lima

Diana Fessler, R-Bethel Township

James Zehringer, R-Mercer County

Bruce Goodwin, R-Defiance

Kevin Bacon, R-Minerva Park

Courtney Combs, R-Hamilton

William Batchelder, R-Medina

Jay Hottinger, R-Newark

Cliff Hite, R-Findlay

Joseph Uecker, R-Miami Township

Lynn Wachtmann, R-Napoleon

John Widowfield, R-Cuyahoga Falls

Bill Coley, R-Liberty Township

While you’ll not often find me praising Governor Ted Strickland, it seems he has done something that is worth at least lukewarm praise. In light of calls to raise tobacco taxes, the Governor has indicated that he won’t be supporting any measures to increase taxes on cigarettes and other tobacco products. As I wrote about here, there is no reason to increase tobacco taxes even further. Tobacco users already pay a disproportionate amount in taxes and it is simply bad policy to further target these users to pay for government services.

Of course, I can’t be too generous to the Governor because the current tobacco tax issue is tied in with his plan to raid the tobacco settlement fund to pay for his economic development boondoggle. There are so many issues involved here that should anger any fan of small government (the notion of a state foundation to battle tobacco use is ridiculous as is the idea that it is proper for the government to try and stimulate the economy through borrowing money) that no one involved in this issue has clean hands. But the Governor does deserve credit for resisting calls to increase tobacco taxes.