BuckeyeBlog

Kudos to Don Brey and the 10th District Court of Appeals: The CAT tax is a sales tax, dammit, and legal and linguistic loop-de-loos can’t change that essential fact. This reverses a lower court opinion to the contrary, and there is next to no doubt that it will be appealed to the Ohio Supreme Court. My guess is it’s a coin flip at best, even more likely than not that the high court will reverse and reinstate the lower court decision.

They’ll be wrong to do so, and knock on wood, maybe they won’t. The line between legislative power and judicial power is a tough one, and a great deal of deference is paid to the legislature. Still, the court plays an important role, including making sure that the legislature is playing by constitutional rules. The CAT tax is more or less the opposite of transparency in government, on two grounds, revealing the amount of the tax and also calling it what it is, and shame on the General Assembly for that.

More generally, there are many problems with the CAT. It’s generally hidden from view-they’ve even made it illegal to disclose the amount of it on the sales receipt, which is contemptible and ought to be unconstitutional. It’s also an open door. Any time the legislature feels it needs more money–which happens, what, every other day?–a closed door conference will be able to raise the CAT rate with very little opportunity for public review. If the day comes when reporters are busy with other stories, the budget looks particularly grim, and the General Assembly is filled with people who gain a moral sense of worth out of spending other people’s money, watch out. Ohioans will find their taxes raised more or less behind the scenes.

Sixteen-year-old Leonard Brown is “surprised by the sheer size of his new school — 231,953 square feet,” and “he’s most excited about the new gym and classroom technology.”

“I’m just ready to start the new school year,” he said.

Remember that last part, Leonard. You still have to open up a math book.

The city of Toledo is halfway through its $640 million building program, with 23 new buildings of a projected 43 new buildings. As it is, Toledo taxpayers paid only 23 percent of the dough in a 2001 bond issue, with 77 percent coming from the state. Who wouldn’t take that deal? Meanwhile, how many private businesses, the ones we rely on to pay these taxes, have engaged in a similar building program, replacing its buildings willy-nilly? What percentage is 43 buildings of Toledo’s total building count? The story doesn’t tell us, but Columbus shot for one-third of its count (after an embarrassing public rejection of the initially proposed 100 percent replacement).

“Schools need ‘additional dollars’” is the headline, and sure enough they do. Yes, it must be that levy season is upon us.

Nothing could better demonstrate the essential problem of government. (Well, nothing short of a war.) Most of us don’t spend a lot of time on the income side of the budget issue, because that’s a whole different set of activities — changing jobs, increasing skills, all big, difficult, long term major efforts.

No, real budgeting is spent on the expense side of the ledger. It doesn’t do any good to say we need additional dollars. So does Donald Trump. The real issue is, given our dollars, how are we going to spend them?

But no, let’s not go there. Let’s just say the school funding system has been ruled unconstitutional four times and raise taxes.

The Akron Beacon Journal calls for higher taxes. Or do they?

The ending sentence of a rather unfocused editorial is, “Recall December 1992, the jobless rate at 7.2 percent: George Voinovich and state lawmakers increased taxes to balance the budget and preserve decisive programs. The state unemployment rate fell steadily until the end of the decade. Yes, there are worse things than higher taxes.”

I’m not quite sure of the post hoc ergo propter hoc reasoning there. Why not, “Recall that Ohio and many other states rode an expansion that extended over more than 20 years largely as a result of Reagan policies on taxes,” etc. But no matter. Each sees his causation where he likes.

The real question is, what does ABJ call for? If anyone can find it here, I’ll eat Joe Hallett’s hat.

The Center for Freedom and Prosperity has released a video by the Cato Institute’s Dan Mitchell that discusses the economic problems that would follow adoption of Senator Barack Obama’s idea to impose Social Security taxes on incomes over $250,000. There’s a lot of good information in this video about tax rates, economic growth, Social Security, and proper tax policy:

Some thoughts about Texas left over from my previous post. As mentioned, according to the US Dept of Labor, Texas added 139,000 jobs so far in 2008. Think what kind of job growth they would have there under a strong national economy. So far in 2008 Ohio has added a paltry 6,000 jobs.

Since the bottoming out of national manufacturing employment in March, 2004, Texas has added 40,000 jobs in the high-paying manufacturing sector. Ohio has lost a further 61,000 jobs.

Weekly wages in Texas are $831 through the 3rd quarter of last year. In Ohio, $730.

Could it be just a coincidence that one manufacturing state with no income tax, no compulsory unionization and a regulatory environment that gets out of the way of free markets is growing so much more robustly in terms of employment and wages than another manufacturing state burdened by a lack of economic and workplace freedom?

Nope, no coincidence. Our empirical work has and will continue to demonstrate this truth: the path to prosperity is lit by economic freedom, individual liberty and limited government.

Columbus native and Northwestern University economic prof Lynne Keisling in her excellent Knowledge Problem blog dishes up the meow mix to WSJ’s Rebecca Smith for a badly misinformed analysis of the impact freer electric energy markets are having in Texas.

Perhaps Ohio’s recent decision to extend government regulation of electric utility energy will protect corporation bottom lines and manufacturing jobs in the short run. Eventually, however, the distorted or completely missing signals of true prices for consumption and true returns for production investments will cause Ohioans to lose out on jobs and prosperity to places with freer markets such as Texas.

BTW, Texas added 139,000 jobs so far in 2008. Ohio has added a paltry 6,000 jobs.

James Nesbitt hits a home run with this entry.

First he catches a reporter actually writing this: “With a 5.5 percent tax during that same time period, the city’s profit would have been . . .”

Profit? Good Lord, if we’re going to editorialize with vocabulary, let’s call it theft. Much closer to the mark. It’s tax revenue, not profit.

Then he catches a good Ohio mayor thinking he’s got someone over a barrel. The city of Mason threatens to impose a discriminatory tax (which should be unconstitutional, by the by, but another time) and the victim business threatens to leave. Our intrepid hero the mayor says not to worry: ”Grossman remains skeptical whether Kings Island can take any action.  ‘I would be surprised if they could de-annex on their own say so,” he said. “I know it is a big company and I know they have lots of resources and power but de-annexing from the city, in my opinion, is not a viable option.’”

Got that, see? Yous guys can’t do nuthin’, see?

“Kentucky Kings Island” has a nice alliteration to it, doesn’t it? Plus some nice hills and river views.

Make it happen, Mayor Grossman.

Two Ohio cities have differing ideas on the proper taxation of entertainment admissions. In Youngstown, the Vindicator reports that “city council on Wednesday will consider reducing the admission tax charged on tickets to events at the [Chevrolet] center from 9.5 percent to 5.5 percent.” This is good news for event organizers, attendees, and perhaps even city government. Youngstown deputy finance director Kyle Miasek correctly notes that attendance will increase due to the lower cost of admission. The Vindicator forgot to take this fact into account in its analysis of the financial effects this measure will have, however:

The 9.5 percent tax generated about $82,000 for the city between February and May, he said. With a 5.5 percent tax during that same time period, the city’s profit would have been about $47,500. (more…)

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: