Jokes come in all shapes, sizes and durations. Ohio’s term-limited, lame-duck governor loves to joke around, like when he boasted last year running for president about his nation-leading income tax giveaways. He cited them as hallmarks of his two terms in office.
Gov. John Kasich proposed, and the Buckeye State’s very conservative GOP-led legislature went along with a plan to disgorge about $2 billion in tax revenue from small businesses. For some, that program bore an uncanny resemblance to the kind of small, lucrative business run by one of the governor’s inside business buddies, and Drive Capital principle, Mark Kvamme.
Operating with the identical political mind-set and long-held economic philosophies that drove Kansas Gov. Sam Brownback to cut taxes as a core principle to boost the Jayhawk economy, Kasich ballyhooed cutting taxes and regulations on business in general and small business in particular, as his secret sauce to help Ohio compete to recover from the worst economic recession since the Great Depression.
In Kansas, Brownback’s experiment is based on cutting taxes as the main highway to progress, but by all key measures it’s failed in spectacular fashion. Kansas lawmakers ditched Brownback’s ill-considered and costly strategy by daring to raise taxes to keep the state from falling farther behind as tax revenues crashed, leaving his state worse off.
In Ohio, Kasich has whistled past the graveyard of poor performance for over six years even though his budgets have been the highest in history. Ohio lawmakers have kept the faith with Kasich and small businessmen like Kvamme who have gamed the system, allowing billions in tax revenue that could be helping local governments move forward, including assisting them with services and centers to keep pace with an expanding opiate epidemic to go uncollected.
To fill the gaping budget hole, legislators have chosen their tool, budget cuts from elsewhere that likely will cause a rupture down stream somewhere.
One northern Ohio newspaper that endorsed Kasich in 2010 when it should have known better, then did so again in 2014, when it had hard data that the governor’s agenda was mostly sloganeering designed to lift up his presidential balloon last year before crashing, editorialized that “Legislators should kill the BID tax break – now. It hasn’t worked. It’s costlier and less equitable than predicted.”
The Cleveland Plain Dealer (PD) wrote “there’s still time for the General Assembly to end a failed experiment in tax policy that’s costing the state more than $1 billion a year, by some estimates. That’s a mountain of lost revenue being pocketed by lobbyists, lawyers, and other small proprietors, without spawning the promised bonanza in Ohio’s economy.”
That “sweet tax break,” as the PD called the “Business Investor Income Deduction” that allows small business owners to avoid paying any taxes on their first quarter-million dollars of income and giving them generous tax breaks on earnings above that, came to life in 2013 and got expanded in 2015.
Kasich brought his silicon valley friend and business confidant, Kvamme, to Columbus with him in 2011, first trying to make him a cabinet officer, then when the Ohio Constitution prevented that, making him a part of the governor’s office staff.
Kasich and Kvamme were two peas in a pod for JobsOhio, the private and secret job group Kasich created, that Kvamme came to run for a short time before wandering off the state stage to get a sweet-heart deal from then OSU president Gordon Gee, who gave Kasich’s venture capitalist friend and behind-the-scene operative $50 million to invest with no public accountability for those investments.
There is no evidence, just sheer speculation, that Kasich’s BID program was tailor made in to suit Kvamme’s “moving at the speed of business” world, but the matchup seems made in American Legislative Council heaven, territory John Kasich visited previously.
But despite the state losing billions from a wild goose chase that never bagged a goose, Ohio lawmakers appear ready to close their eyes and shut their mouths when it comes to rescinding BID.
Instead of reaping more money from businesses like Kvamme’s Drive Capital, GOP legislative leaders are finding more money for programs by cutting elsewhere. When the pie isn’t expanding, cutting remaining pieces into smaller pieces to feed their political hunger is standard practice for fiscal conservatives who recoil from taxing those who can and should pay more and like to whittle down everyone else to make their program policies work.
Kasich has done a poor job of boosting Ohio’s economy, from his inability to create enough good-paying jobs for Ohioans who need them to squandering billions on for-profit charter schools that like small business that qualify for BID have hurt more students than they’ve helped.
When millions in sky-high hedge fund manager fees charged to state retirement funds are added to the impressive list of Kasich’s failed razzle dazzle agenda that includes BID, it doesn’t take an economic genius to realize Ohio has taken the wrong path, time and time again. It’s time Ohio looks at itself in the mirror and realizes giving billions away on failed experiments must come to an end.
If Democrats running for high office in Ohio next year need issues that resonate with voters, they need look no further than unraveling the knot Kasich has tied that puts Ohio behind the eight ball for years to come.
Two billion here, billions more there, and the size of lost opportunities to make all Buckeye’s lives better starts to add up.
While Kasich touts his new book about his second failed try for the White House, issues statements on national and international events not part of his duties as governor, and now says he can go along after all with a proposed seven-year phase out of expanding Medicaid, according to the New York Times, all the programs he started in Ohio that he said the nation should look to as guidance should instill fear in lawmakers sane enough to not fall for his sweet dreams that turned out to be so sour.
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