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Third Base Politics


It’s really very simple.

According to Dix News Service, Ohio Gov. Strickland’s office today reports that the tax revenue shortfall for Fiscal Year ’09 is $912.1 million.

In other words, when drafting their budget, the Governor’s office miscalculated what they would be able to spend by $912.1 million.

In state spending terms, that’s a shit ton.

Ironically, today Economist Art Laffer wrote an editorial appearing the Wall Street Journal stating the following:

And the evidence that we discovered in our new study for the American Legislative Exchange Council, “Rich States, Poor States,” published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.

In other words, when you tax people at a high rate they go away, and so do the jobs they help create.

So now let’s connect the two with an analysis of Ohio’s standing from Rich States, Poor States as mentioned above.


So now we know the following:

  • Ohio is one of the worst taxed states in the nation
  • Individuals who are taxed at a high level leave the state and take their tax contribution with them
  • Ohio received almost a billion dollars less than it expected in FY ’09.

Now I’d like to imagine everyone would agree that Ohio must lower its taxes in order to encourage people and businesses to stay in Ohio and to entice companies to invest in the state.

After all, with an unemployment rate that has skyrocketed by 57% in one year, you’d imagine a crisis of such proportions would be considered a high priority by someone like the Governor of Ohio.

But based on a peek I had at the Governor’s first fundraising letter to his supporters, that simply isn’t the case. What is his solution for solving Ohio’s economic crisis? Education. From Strickland’s letter:

I’m convinced that the key to growing our economy is making sure we have the best educated workforce in the nation. In a global economy, good-paying jobs and capital investment go to where the workforce is most prepared. And this is an area in which Ohio can excel.

Now, for argument’s sake, let’s not assume Strickland’s education proposal isn’t as deeply flawed as many who are not Unions say it is.

In other words, let’s assume(as painful as it may be) it betters education for our students across the state.

Big whoop.

Remember, unemployment in the past 12 months has skyrocketed by 57%. Almost 1 in 10 Ohioans are out of work. Ohio can’t wait 10 years for Little Joey to get through middle school, high school and college so he can show prospective employers that he’s ready to go to work.

With Gov. Strickland not even addressing the major problem with Ohio’s tax burden, Little Joey is going to get the hell out of dodge and move somewhere that won’t tax a huge wad of cash out from his wallet. Even further to the point, it won’t matter how smart Little Joey is if businesses refuse to come to Ohio and deal with the massive corporate taxes that come with maintaining a business there.

It all goes back to Art Laffer’s conclusion from his WSJ article linked above:

States aren’t simply competing with each other. As Texas Gov. Rick Perry recently told us, “Our state is competing with Germany, France, Japan and China for business. We’d better have a pro-growth tax system or those American jobs will be out-sourced.” Gov. Perry and Texas have the jobs and prosperity model exactly right. Texas created more new jobs in 2008 than all other 49 states combined. And Texas is the only state other than Georgia and North Dakota that is cutting taxes this year.

If Ohio wants to solve its economic crisis, Ohio must cut taxes.

And it also must cut Ted Strickland.

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Third Base Politics is an Ohio-centric conservative blog that has been featured at Hot Air, National Review, Washington Post, Los Angeles Times, Pittsburgh Tribune-Review, and others.


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