Category Archives: taxes

Conversion Levy: Permanent Tax Hikes That Remove School District Accountability

Posted on October 22, 2010 by | Leave a comment

Mary McCleary, Policy Analyst

With the start of the new school year, many school districts around Ohio, including Margaretta Local School District, have realized that their finances are in trouble. Thus, these districts (several of which experienced failed levies in the spring primary) are going back on the ballot this November to ask for more money despite the economic hardships already facing many property owners.

To address Ohio’s school funding crisis, Governor Ted Strickland and the General Assembly introduced a new way for school districts to raise money through the establishment of the conversion levy in the 2009 Ohio Budget. Margaretta Local School District is the first district in Ohio to make an attempt at passing this new kind of levy.

If passed, the conversion levy would convert existing school operating levies to a 20-mill floor. Without getting too caught up in terminology, converting to a 20-mill floor essentially removes the protection homeowners have under House Bill 920.

Because of HB 920, property owners only pay taxes on roughly 15 percent of property value increases. For example, if your home is worth $100,000 and increases in value by 10 percent to $110,000, you only pay taxes on $1,500 of the increased value instead of the full $10,000. Conversely, if your home depreciates by 10 percent, your taxes are only reduced by 15 percent of the depreciation.

Thus, HB 920 brings a degree of stability to property taxes: homeowners are not hit with large tax increases when property appreciates, and school districts do not suffer large revenue losses when homes depreciate as they have over the last several years. By design, HB 920 keeps Ohio’s property taxes relatively low.

If the Margaretta conversion levy were to pass, district homeowners would be taxed on 100 percent of property value increases instead of just 15 percent. Given Ohio’s economic condition and the fact the state has the seventh highest state and local tax burden, many homeowners cannot afford higher taxes.

?Another problem with the Margaretta conversion levy is that it is a permanent levy and will consequently cause property taxes to rise indefinitely if passed. Every three years when the county auditor’s office reassesses property values, homeowner taxes could increase significantly. Since the tax hike would not go into effect until after the next reassessment cycle, Margaretta Local School District is selling the levy to voters as type of revenue neutral renewal levy. This approach is, at best, grossly misleading and, at worst, intentionally dishonest.

In addition to skyrocketing taxes, the conversion levy removes the best tool parents have to keep their school districts accountable. When school districts fail to restrain costs, they must ask for more money. The voters then have a chance to examine spending and decide whether or not a funding increase is warranted. If a conversion levy passes, the school district would have little incentive to spend money efficiently and effectively, as revenue would rise every three years beyond the true needs of the school district, and homeowners would have no means to keep the school district accountable for spending choices, as the school district would avoid new levies.

Between 1998 and 2009, per pupil expenditures in Margaretta Schools rose by 75 percent from $5,807 to $10,172 far outpacing inflation, which was only 29 percent. Similarly, the average teacher pay increased 20.1 percent from $45,710 in 2003 to $54,913 in 2010, while inflation was only 18.6 percent. In 2009, the average physical education teacher in the district earned $48 per hour with an annual salary of $64,948. If the average physical education teacher worked the entire year (2,080 hours, instead of the contractual 1,350 hours), he would have earned over $100,000 in 2009.

Although the residents of Margaretta Schools narrowly passed a levy in August, they are notorious for rejecting school levies. When voters reject levies, they fundamentally exercise their right to hold the school district accountable. With a permanent conversion levy in place, voters would lose the ability to reject these property tax hikes.

All Ohioans must be wary of conversion levies. With one vote, taxpayers could unknowingly approve large tax increases for years to come and could lose their most valuable tool in keeping school districts accountable.

For more information, read the Buckeye Institute’s report The Need for Levy Reform in Ohio – Conversion Levy: One Vote, Permanent Tax Increases at www.buckeyeinstitute.org/reports.

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Most Americans Say Government Has Too Much Money and Spends It Unwisely

Posted on October 21, 2010 by | Leave a comment

A new Rasmussen Reports national telephone survey finds that 61% of Adults think the federal government has too much power and money.

Perhaps that’s no surprise since 66% believe America is overtaxed.

An overwhelming 70% of adults say the government does not spend taxpayer’s money wisely and fairly. Just 16% believe the government does spend this money correctly, while another 14% are not sure.

Eighty-five percent (85%) of Republicans and 60% of adults who are not affiliated with either of the major political parties believe the government has too much power and money, a view shared by just 39% of Democrats.
Just 47% of government workers say the government has too much power and money, compared to 65% of those who work in the private sector.

Republicans and unaffiliateds also feel more strongly than Democrats that the government does not spend taxpayers’ money wisely and well.

When it comes to the economy, the message from Americans is clear: Leave it in the hands of the private sector and not the government. That sentiment is shared by sixty-eight percent (68%) of voters who prefer a smaller government with fewer services and lower taxes to a more active one that offers more services and higher taxes. A plurality of Americans believe that government programs increase poverty in America.

Source: Rasmussen Reports, October 17, 2010

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Why the Stimulus has Failed Ohio

Posted on October 10, 2010 by | Leave a comment

By Mary McCleary

It is a generally accepted fact that the stimulus did not work and the supposed “Summer of Recovery” was anything but that. Since the original stimulus package was passed under President George W. Bush, national unemployment has doubled from 4.8 percent to 9.6 percent while Ohio unemployment has risen from 5.6 percent to 10.1 percent. When Congress passed the American Recovery & Reinvestment Act (ARRA) of 2009, President Barack Obama promised unemployment would stay below eight percent, yet unemployment continued to rise.

Both the original stimulus and the ARRA have miserably failed, and the big question is why. Why isn’t all this spending leading to a revitalized economy?

Stimulus spending does nothing to create wealth. It is merely a redistribution of already existing wealth. Sound confusing? Frederic Bastiat, a nineteenth century political economist, illustrates this concept well through his Broken Window Fallacy.

In Bastiat’s example, a child carelessly breaks a store window. The shopkeeper, in turn, must spend money to replace the broken window. Therefore, the shopkeeper stimulates the economy through purchasing a new window, right? Not so fast.

While the window company benefits from the broken window, other people and industries are hurt by the destruction of capital. Due to the broken window, the shopkeeper has less disposable income to spend on other goods and services. He has to purchase a new window instead of spending his money on new business equipment or whatever he chooses. Thus, the shopkeeper is poorer than he previously was, and other industries do not benefit from the shopkeeper’s dollars. No real wealth is created.

How does this tie into all the stimulus spending? Pretend you are the shopkeeper and the government is the child that forces you to spend money. To “stimulate” the economy, the government forces you to give $500 to subsidize a window company. You lose $500 of disposable income, as do the establishments where you would have spent that money. No wealth is created – it is merely redistributed.

When the government stimulates the economy, it doesn’t create wealth. Instead, it merely picks the winners and the losers.

Since March 2000, Ohio has lost 588,600 private sector jobs (second only to Michigan). Of these job losses, 137,000 occurred after ARRA went into effect (Ohio has lost 386,800 jobs since Governor Ted Strickland took over). If “stimulus” spending isn’t helping Ohio reach better days, what will?

* Broad-base tax reform. Ohio has the seventh highest state and local tax burden. High taxes hurt economic growth and give companies an incentive to locate to lower tax states.

* Regulatory reform. Regulations increase the cost of doing business. Just recently, Continental Plastics moved to Indiana to avoid an Ohio regulation costing Toledo over 200 jobs. According to the Toledo Blade, since 2000, about 140 factories have closed in northwest Ohio with a majority relocating to the southern United States. In fact, 20 companies over the last ten years have left Ohio for just Atlanta, Georgia.

* Right-to-work reform. Ohio does not protect a worker’s freedom to choose whether or not to join a union to obtain employment. Over the last 20 years, right-to-work states have added and sustained jobs twice as fast as forced unionization states like Ohio – even after large housing-related job losses in Arizona, Florida, and Nevada. The 15 worst states for job growth since January 1990 are all forced unionization states, while 11 of the 15 top states are right-to-work states.

* Budget reform. Ohio currently faces an estimated $8.4 billion budget deficit. In a state already struggling, raising taxes is not a viable option for recovery. The budget must be realigned to fit the economic conditions of the time. To minimize the effect on our vulnerable populations, the compensation of government workers cannot be taken off the table. If state government worker compensation is realigned to match the private sector, the state could save over $2 billion dollars in the next budget.

As Bastiat and the stimulus have proven, redistributive spending is no way to dig out of an economic hole. While Ohioans have relatively little sway over federal government spending, Ohioans do have an important say in how this state is run. It is time for our leaders to make the tough choices and for the people to hold them accountable when they don’t.

Mary McCleary is a policy analyst at the Buckeye Institute.

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“Pledge for America” and Small Business

Posted on October 7, 2010 by | Leave a comment

The House GOP leadership released their “Pledge to America” last week, which included various proposals focused on helping small business owners and entrepreneurs.

Specifically, the pledge would stop tax increases on all taxpayers (when the Bush tax cuts expire at the end of this year) and provide small business owners with another significant tax deduction to free up additional resources for investment and hiring. The Pledge also repeals the new health care law, and replaces it with reforms that have long been sought by the small business community. On the regulatory front, the Pledge makes members of Congress accountable for the laws they pass by requiring congressional approval of new federal regulations. It also proposes to start chipping away at out-of-control spending, which must be done for the U.S. to remain competitive, fiscally strong and the land of opportunity.

“Business owners want to get back to growing, investing and creating jobs. They want to stop worrying about the uncertainty of higher taxes and a health care bill that threatens to overtake their businesses with unsustainable costs and a blizzard of new paperwork,” said Karen Kerrigan.* She congratulated Republicans for putting forth a pro-growth, pro-entrepreneur agenda that will help small business owners do just that. To read the Pledge, please visit: http://www.gop.gov/

* Kerrigan is President & CEO of the Small Business & Entrepreneurship Council

SBE Council is a national, nonpartisan advocacy organization dedicated to protecting small business and promoting entrepreneurship. For more information, please visit: www.sbecouncil.org.

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Six Month Check-Up of the New Health Care Law: A SBE Council Evaluation

Posted on September 27, 2010 by | Leave a comment

SBE Council issued a “check up” regarding the success, to date, of the Patient Protection and Affordable Care Act (PPACA). According to SBE Council President & CEO Karen Kerrigan, ObamaCare has already broken many promises and left small business owners more vulnerable than ever in terms of losing coverage for themselves and their workforce.

“After six-months of ObamaCare, small business owners are getting hit with higher premiums. And, if the regulatory process continues to move forward on grandfathering, most small business owners will lose the coverage they currently offer or be forced to buy more expensive plans,” said SBE Council President & CEO Karen Kerrigan.

SBE Council highlighted the following problems with PPACA at six months:

• The miniscule tax credits for small business are not working. Many report that the value of the tax credit is too low, and its tight restrictions disqualify many small firms from accessing it.

• Premium costs continue their upward trajectory. Small business owners are reporting premium rate hikes in the 10%-20% range, and higher. PPACA is not helping to lower the cost of health insurance for small businesses – in fact, the new mandates are driving costs higher.

• “Grandfathering” is a joke. Rules issued by Health and Human Services (HHS), if they become final, will force many small firms to purchase more costly plans if they wish to remain “grandfathered” once PPACA fully kicks in. Even the HHS reports that 80% of small firms will lose the plans they currently offer. What happened to the promise of being able to keep the health coverage you currently have?

• Paperwork Nightmare. A massive paperwork burden awaits small business owners in 2012 when they will be required to file a 1099-MISC form for all vendor transactions that total $600 or more on an annual basis. What does this have to do with health care?

• Higher health spending and more bureaucracy. The Center for Medicare and Medicaid Services (CMS) reported that PPACA will increase health care spending by 6.3% annually, consuming nearly 20% of the national’s health care bill. The Congressional Research Service described the size and scope of PPACA’s bureaucracy as “currently unknowable.” More cost to taxpayers – higher taxes for small business owners.

• The high-risk pools are a failure. In Iowa, 32 people have enrolled in the state’s high-risk pool, which beats Kansas where only 17 people have enrolled.

• Uncertainty in the marketplace. Small business owners remain uncertain about scores of other regulations being developed by the federal government as to their impact on health savings accounts (HSAs) and other consumer-directed health plans. Will these plans survive once HHS decides what “qualifies” as health care? Will a government-designed “essential benefits package” drive HSAs out of the marketplace?

“ObamaCare has increased costs, uncertainty, and the size and scope of government. Unfortunately, this is only the beginning and we have to hope that more rational heads will prevail in the new Congress so this mess can be fixed,” concluded Kerrigan.

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Posted in business, economy, health care, politics, taxes

School Building Projects – Rewarding Special Interests at the Expense of Students, Teachers, and Taxpayers

Posted on September 23, 2010 by | Leave a comment

By Mary McCleary, Policy Analyst

Hiring union labor in school construction projects increases the costs period. You will be hard pressed to find an example in modern-day Ohio where hiring a labor union has led to cost savings that otherwise would have gone unrealized. By their very nature, labor unions drive up costs through paying workers higher wages than the market dictates.

Due to Senate Bill 102 passed in 1997, school districts are exempt from Ohio’s little Davis-Bacon law, which requires the government to compensate laborers at the prevailing wage rate. Essentially, this law forces workers to join unions to work on government-funded building projects. More often than not, school districts choose independent companies because they can bid projects at lower, more competitive rates than their union counterparts.

The fact that using union labor drives up school construction costs can be illustrated by three recent examples. Earlier this summer the Executive Director of the Ohio School Facilities Commission (OSFC) Richard Murray chose to use a project labor agreement for the construction of the new deaf and blind schools in Columbus. At each of the four stages of the design process, the OSFC signed off on the cost estimates. When Murray decided to use a project labor agreement, bids for the project came back $11.4 million over the $28 million budget – a 41 percent increase in estimated costs.

Only the kitchen equipment portion of the deaf and blind schools was exempt from a project labor agreement. Ironically, the kitchen equipment bids were the only bids that came back within the allotted budget, and there were twice as many bids for kitchen equipment than there were for any other part of the project.

Second, the Washington-Niles Local School District near Portsmouth planned to use a project labor agreement at the advice of the OSFC. However, when the bids came back 22 percent over budget, the district backed out. Washington-Niles is the eighth poorest of the 612 Ohio school districts and simply could not afford such significant cost overruns.

Third, the New Boston School District, also near Portsmouth and among the poorest Ohio school districts, has accused the OSCF of increasing costs and delaying the project because the district refused to accept a project labor agreement. When the district ran into a few problems during the planning phase, Richard Murray told school board members that he would make their problems disappear if they used union labor.

Because the OSCF has added extra costs to the schools estimate to account for a project labor agreement, the project is over budget by $400,000. To reduce costs, the OSCF has demanded the removal of the proposed facility’s front area and the reduction of cafeteria size. The OSCF has put construction on hold until the district concedes and is charging the district fees for delaying the project.

Unfortunately, when a project goes over budget due to a labor agreement, the OSFC recommends reducing building size and cutting other amenities instead of finding savings through nixing the project labor agreement. Sadly it has become more important to enhance the wallets of special interest groups rather than to act in the best interest of the students, their teachers, and the taxpayers.

With Ohio’s economy in shambles, this is no time to be pushing for the use of unions in school construction projects. Between January 1990 and July 2010, job creation in states that forced workers to join unions to obtain jobs only grew by 17 percent. On the other hand, job creation in states that protected a worker’s freedom to choose whether or not to join a union to obtain employment grew by 37 percent, or more than double the rate of forced unionization states.

Ohio’s road to economic recovery will not be paved with higher taxes and will not be found through paying homage to unions. Robbing Peter to pay Paul does nothing to promote job growth or prosperity in Ohio. Try explaining to the taxpayers that they are better off by paying more for less. The logic simply does not add up.

Source: Buckeye Institute, September 6, 2010.

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Planned Parenthood, Legislator Defend Massive Overbilling Practices in California

Posted on September 15, 2010 by | Leave a comment

In new comments about a case pending in federal court showing how California Planned Parenthood massively overbilled the state on the purchase of birth control for poor residents, the abortion business and a state legislator are defending its actions — that could cost it federal funding.

P. Victor Gonzalez, the former Chief Financial Officer for Planned Parenthood of Los Angeles saw millions in fraudulent overbilling to state and federal governments and was subsequently fired when he blew the whistle.

He filed a lawsuit that a lower court dismissed but a federal appeals court, in July, reinstated.

Gonzalez says his own internal audit estimates that Planned Parenthood overcharged California taxpayers for purchasing birth control by at least $180 million.

A new Fox news report indicates he also found $5.2 million in overbilling at one Planned Parenthood affiliate in San Diego alone and he says Planned Parenthood officials intervened to prevent internal audits.

While other public health facilities and private facilities charged the state between $8 and $9 for a cycle of birth control pills, Planned Parenthood charged almost $12. The Planned Parenthood charge to the California government was several times more than it paid for the drugs originally.

In one case Fox News highlighted yesterday in its report, Planned Parenthood Los Angeles paid $225,695.65 for Ortho Tri-Cyclen birth control pills but billed the state government more than $918,000.

Planned Parenthood Affiliates of California defends the practice in comments to the news outlet.

“The allegations in the lawsuit are false and were addressed by the State of California long ago,” it says. “The California State Legislature passed a law in 2004 making it clear that the billing practices at issue in the case are completely permissible.”

Former Assemblywoman Hannah-Beth Jackson was the sponsor of the law — which came in response to reports of the overbilling instead of fines or charges for those involved in defrauding the government — and she defending the practice to Fox News as one of “access,” saying Planned Parenthood could never afford to give birth control to poor women of California without overcharging the state when it sought Medi-Cal refunds.

Though Planned Parenthood Affiliates of California dismisses the lawsuit and questions about it, the national Planned Parenthood abortion business is apparently more concerned.

The regional affiliate of Planned Parenthood where teenager Holly Patterson died from using the dangerous RU 486 abortion drug first lost its affiliation with Planned Parenthood in early August because of significant financial mismanagement.

Earlier this month, the New York Times released a new report showing Planned Parenthood Golden Gate faces an audit from the criminal division of the Internal Revenue Service.

The report detailed how an unnamed former employee interviewed with the Oakland field office of the IRS on Tuesday in response to a complaint he lodged with the governmental agency.

The employee, who would not let the Times name him for fear of his future job prospects, said he filed a two-part complaint about the abortion business’ problematic relationship with its political arm and about financial problems at the abortion business.

The overbilling problems also extend to Planned Parenthood centers in New Jersey.

The U.S. Inspector General for the Department of Health and Human Services uncovered a consistent problem with New Jersey-based family planning clinics run by the Planned Parenthood abortion business. They were found to be improperly billing Medicaid for services that did not qualify as family planning.

New Jersey authorities were sent letters in July 2007, June 2008 and August 2008 notifying them of the problems and requesting action to correct the errors. The reports found billing errors from February 1, 2001 through January 31, 2005.

An initial audit revealed New Jersey improperly received federal reimbursement at the enhanced 90% rate for 160,955 prescription drug claims that were billed as family planning, but did not qualify as family planning services. A letter from the Inspector General to New Jersey officials recommended that New Jersey repay $2,219,746 to the federal government.

The state eventually returned $2.9 million to the federal government last month.

Also, pro-life advocates say they believe Planned Parenthood in Iowa is overbilling the state for “bilking insurance companies out of grossly inflated fees.”

Operation Rescue revealed Planned Parenthood is charging insurance companies $1,000 for the drug-induced abortion process even though the overhead costs for the abortion are lower with the abortion practitioner off site via telemed abortions.

This overbilling effectively drives up the cost of health insurance for everyone, its president, Troy Newman, contends.

“Planned Parenthood of the Heartland is making a killing on medical abortions,” he said. “Planned Parenthood is gouging insurance companies twice the price of their cash abortions. That’s how they can afford to keep their smaller clinics running.”

“And if taxpayers are forced to fund these abortions, there’s no telling how much they will charge, because government funding is a blank check,” he added.

Source: LifeNews.com, September 10, 2010.

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Effects of Federal Tax Cuts on Small Businesses

Posted on September 13, 2010 by | Leave a comment

By Congressman Steve Austria

In the past month, I have talked with many small business owners across the 7th Congressional District – from farmers to manufactures to members of our local chambers of commerce. Each has questioned and voiced their concerns regarding the temporary tax cuts put in place in 2001 and 2003 that will expire on January 1, 2011 if Congress does not take action.

If Congress allows the tax cuts to expire, it will equate to a $3.8 trillion tax increase that will affect all taxpayers. With the numerous taxes already imposed in legislation ushered through by current Congressional leadership, the last thing Ohioans need right now are further tax increases. In particular, small businesses – which produce 70 percent of new U.S. jobs – will see a direct impact that will affect their ability to create and sustain area jobs.

Specifically, if the tax cuts are not extended the individual income tax rates will increase across the board. Not only does this take money out of the wallets of all taxpayers, but many small businesses are taxed by this rate as well. This increase could be detrimental to those businesses that are already facing difficulties in obtaining credit and meeting payroll.

In addition, if no action is taken the federal estate tax will be reinstituted. This tax disproportionately affects small businesses and family farms. Many times, upon the death of an owner, small businesses are forced to sell to pay this tax and jobs are lost.

The indecision surrounding this issue is causing uncertainty for our local businesses who are seeking assurance in these difficult economic times. Congress needs to make the tax cuts permanent including the estate tax, capital gains tax and dividends tax to assist in creating an environment of confidence and encouraging local entrepreneurs to invest in their businesses creating long-term, sustainable jobs.

Beyond permanently extending the tax cuts, Congress needs to stop the spending. According to a recent U.S. Census Bureau report, federal domestic spending increased by 16 percent to $3.2 trillion in 2009. This does not include any interest paid on foreign debt. If we don’t stop the spending and let Americans keep more of their hard-earned money we won’t be able to turn the economy around.

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The Hosptial Tax

Posted on September 7, 2010 by | Leave a comment

By State Representative Jarrod Martin

As you may be aware, Ohio faces incredibly important fiscal decisions as an $8 billion budget deficit looms in the next year. With 10.5 percent of Ohioans unemployed and thousands of jobs lost in the past 12 months alone, it is important that lawmakers in Columbus be focused on finding long-term solutions to our state’s budget problems.

House Bill 1, the biennial budget for 2010-2011, included a new hospital franchise fee, which raised taxes on our health care sector. According to the Ohio Hospital Association, this fee will generate approximately $718 million for the state.

Approximately $575 million of the new hospital franchise fee will be reimbursed to hospitals. To correct the disparity between these two figures, Ohio’s hospitals are responsible for about $150 million in new fees. This new responsibility has caused many of Ohio’s hospitals to cut jobs, reduce services, or delay expansion projects.

Hospitals are an important presence in Ohio, as they are among the top employers in the state. They represent a growing sector within the economy at a time when this sort of economic expansion is scarce. As a growing sector, hospitals also generate crucial economic activity. In fact, they are one of the major drivers of Ohio’s economy and provide much-needed jobs for many communities.

The new hospital franchise fee attempts to balance the state’s budget by drawing from Ohio’s hospitals. The goal is to decrease the deficit, but the consequences of this tax must be noted. It has the potential to affect job creation efforts and the welfare of Ohio’s families for years to come.

I am concerned that this hospital tax will not be an effective way to raise revenue for the state. It creates a palpable strain on the health care system. In addition, it adds pressure to Ohio’s taxpayers, as it asks them to take on the duty of balancing the budget.

As a solution, Representatives Terry Boose and Troy Balderson have introduced House Bill 497, which aims to minimize the hospital franchise fee. The proposed bill would subtract the cost of uncompensated care from the tax base, as well as Medicare and Medicaid costs. It would also reduce the tax base from 1.61 to 1.5 percent. These courses of action would follow the recommendations from the Ohio Hospital Association.

By relieving hospitals of taxes on the free services they provide, hospitals could save millions of dollars. This money saved could be used to pay their employees, renovate facilities and maintain stellar service to Ohioans. Ensuring a consistently outstanding health care system promotes the well-being of both the citizens of Ohio and the state’s economy. House Bill 497 is a step in the right direction toward rebuilding our economy and making Ohio a great place to work, live and raise a family.

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Cost of Government Day and Ohio

Posted on August 23, 2010 by | Leave a comment

Ohioans worked 230 days before their portion of government spending and debt was paid. The national average was 231.6 days, according to the Cost of Government Day report.

“The calculation of Cost of Government Day for each state is based on the varying government burdens suffered in each state. Federal tax and spending burdens are also a large contributing factor. These federal burdens vary because relatively higher burdens are borne by states with relatively higher incomes. State and local tax and spending burdens vary as well.”

“In recent years most states increased taxes to continue their spending extravaganzas during the economic downturn.” The Cost of Government reported state tax increases since 2003 based on the National Association of State Budget Officers (NASBO). Ohio earned the honors of the state with the 9th highest tax increases. Since 2003, Ohio taxes increased over $13.2 billion. That means the average tax increase for every Ohio citizen was $1,140.98.

“Unfortunately, state lawmakers’ penchant for tax hikes has shown no sign of abating this year: FY 2010 net tax increases across the U.S. total $23.9 billion. As governors and legislators have learned that tax increases are political losers that lead to a loss of business, jobs, residents, and economic growth, they have started to search for less visible ways to acquire revenues that keep them from being forced to cut spending.” Some examples of less visible means of taxation include increasing fees, increasing sin taxes, etc.

As might be expected, taxpayers have been looking to escape the burden of increasing taxes. Migration to states with lower taxes is reportedly the preferred strategy.

“Several studies, including the American Legislative Exchange Council’s “Rich States, Poor States,” and past reports by the Americans for Tax Reform Foundation have documented the movement of taxpayers from high tax to low tax states in recent years.”

“These studies present compelling evidence that taxes are the single largest factor in interstate migration, compared to factors such as climate, employment, family relocation, etc.”

Using Internal Revenue Service data, the report shows that “the ten states with the highest tax burden lost over 3 million residents from 1998 through 2008. These residents took with them a staggering $92 billion in income”.

“During the same period over 2.3 million migrants moved to the states with the lowest tax burden, bringing more than $97 billion with them.”

“In addition to higher levels of emigration, higher tax states also maintain higher unemployment rates, placing an expanding tax burden on a shrinking tax base. It is unsurprising, then, that the top five highest-tax states consistently have about a 0.5 percent higher unemployment rate than the five states with the lowest tax burden.”

“States that attempt to raise taxes to balance their budgets encourage their most productive citizens to find more welcoming homes. They also discourage productivity, as taxpayers get to keep less of what they earn in high-tax states. Worst of all, increased taxes provide government with the permission it needs to grow by sustaining the bloated spending of irresponsible state governments. Absent significant changes in their tax-and-spend schemes, these high tax states will soon find themselves without a populace to support the extravagant costs of living in those states.”

I still wonder if allowing casinos to operate in Ohio will do much to lessen the tax burden. In the long run, I the negative social impact of related crime and wrecked families will likely prove the cost was greater than the benefit.

A more responsible approach would have been to cut more unnecessary programs instead of threatening those programs most needed for the most vulnerable in order shame those who still possess a moral conscience.

Nevertheless, the report presented one positive development. In 2009, Ohio ranked 31st among the 50 states in terms of number of days worked to pay for national spending. This year, Ohio was ranked 27th. This means citizens worked fewer days to pay for the Empire’s spending spree than they did last year.

Hoo Rah!

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