Last week, several conservative bloggers, including Virginia-based/unofficial Kasich campaign blogger Jon Keeling (a.k.a. I.T. 1040sauce) wrote about a recent “study” by the Tax Foundation regarding Ohio’s tax climate.
Billed as a non-partisan organization, the Tax Foundation is nonetheless a conservative ideological one whose studies and methodology has been criticized widely by economists.?
Among its board members is Gingrich-era House Ways and Means Chairman Bill Archer.? It’s President, who authored the “study” on Ohio, is Scott Hodge. According to the Tax Foundation’s website, Hodge was behind the Gingrich and then Bush Administration’s effort to cut the federal capital gains taxes.? “Before joining the Tax Foundation, Scott was Director of Tax and Budget Policy at Citizens for a Sound Economy. He also spent ten years at The Heritage Foundation, including eight years as Heritage?s Grover Hermann Fellow in Federal Budgetary Affairs.”? Citizens for a Sound Economy was the predecessor organization of Dick Armey’s FreedomWorks and Americans for Prosperity.
So, when you see someone like Hodge from a conservative organization on tax issues suddenly decide to issue a report on Ohio’s taxes at the beginning of an election year in which the Republican candidate has made taxes his entire platform, I guess you can guess what that report would say, right?
1.? Ohio has actually lost more population after massively cutting the income tax.
The Tax Foundation’s own data rebuts Kasich’s main argument that tax cuts stem out-of-state migration.?
2005 was the first year of massive income tax cuts.? The result was that population loss actually accelerated.? Does this suggest a negative correlation?? No, but it does establish that there is no correlation between cutting taxes and population lost.? Remember, in conservative blogs, the use of a chart ends all debate.
2.? According to the conservative Tax Foundation, state spending in Ohio per capita has been relatively flat when you factor for inflation.
Second, has Ohio seen exploding state government spending?? Not according to Hodge:
During the same period, however, Ohio’s state spending grew from $38 billion in 1993 to over $60 billion today, roughly keeping equal after adjusting for population and inflation changes. (emphasis added).
Basically when you adjust for changes in population and factor in inflation, Ohio is spending the same amount per capita as it was back in 1993.? That seems to refute any notion by Kasich that Ohio has out-of-control government spending, especially when you consider the source.
Don’t get me wrong, the study talks negatively about Ohio’s tax environment (it is, after all, a study by the Tax Foundation), but the study when taken as a whole, does not do what you’d expect an election-year study by the Tax Foundation would say–? It does NOTHING to support Kasich’s case for repealing Ohio’s personal income or estate taxes.? Instead, quite the opposite.? It provides a conservative argument why Kasich’s platform is unlikely to improve Ohio’s economy.?
3.? The Tax Foundation‘s own study concludes less expensive, more modest reforms other than what Kasich is promoting would be more effective.
Even though the stated purpose of the study is to suggest improvements to Ohio’s tax environment to make it “attractive” to businesses and job growth (the stated rationale for Kasich’s platform), it doesn’t even discuss either of Kasich’s proposals as something that would significantly improve Ohio’s economic climate.
The Tax Foundation does not even call Ohio’s progressive income tax or its estate tax one of Ohio’s most “anti-growth taxes.”? Again,the Tax Foundation’s study seems to suggest that Kasich’s plan is an ineffective way of improving Ohio’s economy.? Let me say that again, one of the most conservative tax organizations in the nation cannot bring themselves to say that Kasich’s platform would help. Instead of repealing Ohio’s personal income tax, the Tax Foundation instead suggests, predictably, that Ohio move to a flatter income tax.? I will say that Ohio’s nine income brackets does seem excessive.?
The taxes the Tax Foundation suggests should be repealed is the Commercial Activities Tax and the state’s capital gains tax.? Ironically, the Tax Foundation singles out the CAT tax as the most anti-growth tax in Ohio.? Ironic because it was instituted by Republicans in the General Assembly because the Tax Foundation called Ohio’s inventory tax… the most anti-growth tax in Ohio.?
However, nowhere in this study does the Tax Foundation recommend any component of John Kasich’s platform.
In fact, the massive reductions in spending caused by a repeal of the personal income tax would make the changes the Tax Foundation recommends fiscally impossible.
4.? Ohio’s personal income tax rates don’t put Ohio at an unique disadvantage to other States.
According to the Tax Foundation: “Ohio’s top income tax rate of 5.925% is about average regionally and nationally.”? What the Tax Foundation says makes Ohio rank so poorly in its business environment ranking (which has been widely criticized by economist for ideological bias) is local municipalities and school districts income taxes.
When not even the Tax Foundation can sign onto your signature issue, you know you have problems.? While Keeling and other conservative bloggers liked the Tax Foundation’s press release for the study for its catchy headline, they apparently didn’t read the study.? Because the actual study is a damning indictment as how silly repealing Ohio’s income tax would be.