Ohio Taxes
An interesting piece from the Noose Son
Cut the lies; Ohio taxes not out of sight
Last weekend former Ohioan Chester Finn Jr. went off on a rant about our state in The Wall Street Journal. Important truths were hyperbolically mixed in with patent untruths.
Mr. Finn, who, like The Journal, is no fan of Gov. Ted Strickland, is correct that the state has serious economic problems. But he — with other conservatives — should stop saying Ohio is among the highest-taxed states in the country. He is wrong.
That contention originates with the Tax Foundation, a think tank that gets a lot of mileage from celebrating Tax Freedom Day. It and Mr. Finn say that, in 2007, Ohio had the fifth-highest state and local tax burden.
The Tax Foundation's calculation is complex, and it includes subjective assumptions that experts across the country, not just in Ohio, argue are dubious.
A more straightforward — and the most universally accepted — way of looking at a state's tax burden is noting the amount of state and local taxes people pay per capita, or the percentage of personal income they pay in taxes. On these scores, Ohio has been in the middle of a tight pack.
According to 2006 Census data, Ohioans' state and local tax burden, as a percentage of their personal income, ranked 18th. Note that Kentucky scores seven places higher, but just three-tenths of 1 percent separates Ohio and its neighbor.
On a per capita basis, Ohio did better, coming in at 24th.
In this case, the difference between Kentucky and Ohio is $548. Again, though, many states are bunched together. Kentucky has a much-better sounding — and enviable — 40th-place ranking.
By these measures, there's just no case that Ohio's taxes are widely out of the mainstream.
More important, these 2006 numbers — the latest that are available from the Census Bureau — do not take into account Ohio's well-publicized and major tax cuts. In 2005, individual Ohioans saw the first installment of a 21 percent income tax cut that will be phased in over five years. The last of the annual 4.2 cuts will take effect next year.
Meanwhile, the equivalent tax for businesses — the corporate franchise tax — is being eliminated, disappearing next year. And the tangible personal property tax has been done away with.
These business taxes were replaced by a broadly based commercial activity tax that will result in lower taxes for most Ohio companies. All the projections are that the new CAT tax is a net major tax break for businesses.
These cuts were passed under former Republican Gov. Bob Taft and a Republican legislature, but mostly are taking effect under Gov. Strickland, a Democrat. In other words, it's this administration that's having to hold down spending to pay for the tax cuts. Guess which work is harder?
If, as Mr. Finn suggests, many of Ohio's problems are rooted in its tax rates, it's hard to see how the state is "making all the wrong moves" to reverse its decline. Or maybe Mr. Finn has been gone from his home so long he doesn't know about the tax cuts.
If there's anything Ohio should be rabidly criticized for, it's that political leaders have been slow to invest in higher education — refusing to see the connection between affordable and quality colleges and creating a knowledgeable work force.
Making that commitment, of course, is not free, and Gov. Strickland, as Mr. Finn notes, is backing those investments even as he's having to make budget cuts.
Ohio and its politicians should have to account for the state's shortcomings. But nobody should have to spend precious energy rebutting diatribes that rely on partisan and ideologically-motivated fiction.
Story
here.
