Buckeye Testifies About the Critical Need for Tax Reform

Posted on May 10, 2013 by Greg R. Lawson
On Wednesday, Buckeye Institute offered testimony to the Ohio House Ways and Means Committee on one of the hottest topics in Columbus: municipal income tax reform.  This is a key issue for Ohio’s future economic competitiveness for several reasons.

First, Ohio’s tax burden is too high to keep us competitive in the global economy, but it’s not just our state taxes that are a problem.  Local taxes are just as bad or worse.  According to the Ohio Department of Taxation, Ohio ranks 13th in local tax burden as a percentage of income.  According to the non-partisan Tax Foundation, our business tax climate ranks a poor 39th while our overall state and local tax burden still puts us in the top half at 20th place.

To reform our tax system in the long run, we must address not only the rates we pay but also how we tax.  In the shorter term, there is something Ohio can do to alleviate serious burdens on Ohio businesses, particularly small companies: municipal income tax reform.

Ohio is one of only a few states that even allow municipalities to levy income taxes.  Of the states that allow municipal income taxes, the majority of these only see taxes assessed by major cities. By contrast, with 593 municipalities levying this tax, Ohio trails only Pennsylvania, with 2,492, in the number of taxing municipalities nationwide.

Unfortunately, Ohio is unique in the nation as the only state allowing each municipality to draft its own rules for withholding and the calculation of penalties.  This leads to absurd situations where contractors may have to file income tax returns for each jurisdiction in which they do business (there was testimony from small businesses that had to file over a dozen returns) no matter the size of the liability.  Often, the cost of complying with the labyrinth of paperwork exceeds the actual tax!  Remember, small and especially entrepreneurial businesses are the typical net job creators in America today.  Many of them are unable to afford the legion of accountants and lawyers necessary to assure compliance with these local taxes.

This raises the question of why Ohio would want to raise significant barriers to entry for these new companies.  The answer is that it doesn’t, but until it can simplify its uniquely complex and burdensome municipal income tax structure, Ohio will in effect be doing just that.  And until then, The Buckeye Institute will continue work to reduce barriers to business entry, and to create a simpler, flatter, more transparent tax system for Ohio.
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Delay in DSH Cuts Means No Need to Rush on Medicaid

Posted on April 16, 2013 by Greg R. Lawson

This week, the Ohio House of Representatives is poised to pass its version of the biennial budget.  While the bill looks much different than the blueprint originally introduced by Governor Kasich, and now includes changes to his tax reform and education funding plans, the biggest change involves Medicaid.  The Ohio House stripped the expansion from a substitute version of the bill that was introduced last week.

While special interest groups favoring expansion have argued that federal cuts to uncompensated care make it essential that Ohio expand Medicaid in this budget cycle, the Obama Administration, ironically, has given everyone a good reason to take a deep breath and focus on making good public policy.  As the Heritage Foundation’s Nina Owcharenko states on National Review’s Corner blog,

“Tucked away in the president’s latest budget was a recommendation to delay scheduled cuts in payments to hospitals that treat large numbers of the uninsured patients and therefore provide a disproportionate amount of uncompensated care. The cuts in Disproportionate Share Hospital (DSH) payments were enacted under Obamacare, and the call to postpone them constitutes another admission that Obamacare’s grand plans and promises are falling short. More important, it provides another reason for states not to undertake the Medicaid expansion encouraged by Obamacare.”

Furthermore, the expansion proponents claim that the DSH cuts made the expansion absolutely essential to prevent some hospitals from having to close down seems a bit hyperbolic given a recent report by Jason Hart of Media Trackers Ohio:

 “Contrary to Ohio Hospital Association (OHA) claims that the Ohio General Assembly must expand Medicaid to fund care for the poor, most of the hospital lobby’s members would have recorded positive net income in 2011 even with no charity care offsets.”

The decision to expand Medicaid would likely be irreversible—both for legal and political reasons.  Even if the federal government changes the rates, Ohio likely would be trapped in the program.  The decision to expand is therefore not one that should be made in haste.  The Obama administration’s recommendation to delay DSH cuts removes an argument that had been made in a rush to judgment, allowing Ohio policymakers to take more time to look at all of their options without having a “Sword of Damocles” hanging over their heads.

 

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Today is Tax Freedom Day in Ohio!

Posted on April 12, 2013 by Greg R. Lawson

Tax reform continues to be a big issue in Ohio as the biennial budget debates continue.  Regardless of what the final reform package might look like, everyone can agree we need to continue lowering the rates and allowing Ohioans across the board to keep what is theirs.  To illustrate this point, consider that today is Tax Freedom Day in Ohio.  That’s right, according to the non-partisan Tax Foundation, April 12 is the day where Ohioans will have finally earned enough to pay their overall tax bill from all levels of government.

Thanks to reforms Ohio has made in recent years, Buckeye State residents are finally clawing their way back into the bottom half of the tax burden.  This year we rank 28th.  Meanwhile, Californians (no surprise here) will be working nearly two more weeks to pay their tax bills off by April 24 and New Yorkers (again, no surprise) will be working all the way to May 6.  Overall, the average Tax Freedom Day in the U.S. has crept up by five days since 2012 to April 18.

So why does it take so long for people in this country to pay off their tax bill?  Simply put, it is because of the multiple layers of taxation everyone faces. Consider the myriad of different of forms taxation that we all pay:

* Federal, state and (especially in Ohio) local income taxes;

* Various social insurance taxes (Social Security, Medicare, unemployment);

* Federal, state and local excise taxes (like sales taxes);

* Corporate taxes;

* Capital gains taxes;

* Estate taxes (though thankfully no longer in Ohio); and

* Property taxes.

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“Where There is Despair, May We Bring Hope”: A Eulogy for the Iron Lady

Posted on April 8, 2013 by Greg R. Lawson

“Where there is discord, may we bring harmony. Where there is error, may we bring truth. Where there is doubt, may we bring faith. And where there is despair, may we bring hope.” –Margaret Thatcher upon election as Prime Minister, 1979

Margaret Thatcher, one of the most consequential of Great Britain’s 20th Century Prime Ministers, passed away earlier today, thus closing a major chapter of conservative and free market history.

At a time when all-too-often we call people “giants” for relatively mediocre accomplishments, Margaret Thatcher truly earned the title.  Along with President Reagan and Pope John Paul II, the “Iron Lady” as she came to be called, played a pivotal role in the final phases of the Cold War.  She was also an unabashed and tireless advocate for free markets.  As Ed Feulner, the Heritage Foundation’s long-serving President, states in a eulogy to Lady Thatcher:

“At home, Lady Thatcher’s free-market reforms were revolutionary – and salutary. Using deregulation and privatization, she restored Great Britain, once dismissed as the “sick man of Europe,” to its position as a world power. Indeed, her policies led the way and inspired other nations – including those in newly free Eastern Europe – to adopt similar reforms to boost their economies.”

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Sticker Shock! ObamaCare Bills Coming Due

Posted on April 3, 2013 by Greg R. Lawson

Those who argued that ObamaCare was a looming public policy disaster are being vindicated almost daily as Americans confront sticker shock over the legislation’s most expensive components.

According to the Columbus Dispatch, a new study from the Society of Actuaries found that,

“The cost of health care for Ohioans who buy individual coverage directly from insurers is projected in one study to soar by more than 80 percent by 2017 under the federal health-care overhaul.  That would be the largest percentage increase among all states, according to a report released this week by the Society of Actuaries, a national group of financial-risk analysts.”

Overall, the same study found that premiums are expected to rise approximately 32 percent nationally.

While this study focused on the individual market, not the employer-based market where many individuals and families obtain coverage, it still raises concern about the veracity of ObamaCare’s promise of affordable health care for all Americans and the longer term implications of ObamaCare’s implementation.

There remains a high likelihood that many healthy young adults will opt to pay the “tax” associated with ObamaCare rather than availing themselves of employer, much less individual, insurance coverage.  In fact, for nearly all healthy young adults, that is the more prudent financial decision because they will be able to procure coverage during enrollment periods after a diagnosis based upon ObamaCare’s requirement that insurers provide coverage for those with pre-existing conditions.  Over time, this probability will lead to many older and sicker individuals being relegated to insurance pools that will further reinforce the upward trend in premiums.

As scholar Walter Mead mentions in his blog,

“As we’ve noted before, there’s nothing stopping the young and healthy from paying the penalty instead of the premiums and waiting until they’ve incurred serious medical costs to jump into the insurance market.  Remember that under Obamacare pre-existing conditions don’t disqualify you from coverage.  As older people and those with greater need for services increasingly dominate insurance pools, premiums will rise.”

Do you suppose Nancy Pelosi now regrets her infamous statement?

 “We have to pass the bill so that you can find out what is in it.”

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Buckeye Institute Participates in Debates on Medicaid Expansion

Posted on March 25, 2013 by admin

Our President, Robert Alt, will be participating in two upcoming high profile debates regarding the wisdom (or unwisdom) of expanding Medicaid in Ohio.

This Thursday, he will be debating the Vice President of Government Affairs for Cleveland’s MetroHealth and former Ohio Medicaid Director, John Corlett, at the Cleveland Metropolitan Club.  More information on this event can be found here.

Then he will debate Sean McGlone, the Senior Vice President and General Counsel for the Ohio Hospital Association at a meeting of the Federalist Society on Tuesday, April 9 at the Columbus Athletic Club.  More information can be found here.

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Strongsville Teachers’ Strike: Collective Bargaining Run Amok!

Posted on March 25, 2013 by Greg R. Lawson

Ohio’s broken collective bargaining process is showing its true colors again.  A highly compensated group of teachers has engaged in a particularly ugly strike that leaves children in the middle of a heated dispute between a Strongsville School Board that is weighing fiscal considerations and a profligate public-sector union.  The dispute hinges on benefits that management deems to be unsustainable and the union believes to be non-negotiable.

Not only has the education process been interrupted as students meet different substitute teachers on a near-daily basis, but some of the nearly 400 members of the Strongsville Education Association (SEA) who have been on strike for three weeks have engaged in provocative and—in some cases—illegal behavior.  For example, members of the Strongsville School Board allege that union members barricaded the parking lot of the negotiating site using 100 people who, at least initially, refused to let the school board members leave.  SEA members also protested in front of the homes of school board members, and two teachers were arrested in the first week of the strike—one for disorderly conduct after refusing police orders not to block the entryway to a school and another for reckless operation of a motor vehicle (member’s pick-up truck was used to attempt to cut off a van carrying substitute teachers).

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