John Kasich Told Me “NO”

And I’m glad he did. That has had a major impact on my stance.

Back in the 1990s, when “welfare” was the issue of the day, I was pushing 30 or had just recently crossed that rubicon. I wrote a two-page letter to then-Congressman Kasich, who represented a district near my own, regarding the “welfare” issue. In my letter, I posited what I considered a well-reasoned and pragmatic approach to the “welfare” issue. I was trying for the “half a loaf” idea. I never actually expected Mr Kasich to write me back, especially since I wasn’t in his district.

I was surprised when I got a two-page letter back from him. While it did seem to be a form-letter format (and who can write a personal letter to 5000 people a week?), it was a definite “no” letter. In the letter was an entire list of reasons why my idea was bad for the country and all the things Mr Kasich was working on, which would be much better for the country. Mr Kasich showed me that my “half a loaf” was, in actuality, a sell-out. I was selling the farm for a promise of a bushel of beans to be received at a later date. And I was impressed with the thoroughness of the information and reasoning.

And I was surprised at how much was accomplished with the “welfare” reform that passed. It was indeed a great day for the country when that “welfare” reform was finally signed into law.

From that point on, I decided I was not going to sell the farm for a wink and a promise. I was not going to settle for “half a loaf” which amounted to the two butt-ends of the loaf, while giving up the rest of the loaf (and my principles to boot) to those who were destroying this great nation.

Mr Kasich is now in private life, having left the US House of Representatives several years ago. But he is running for Governor of Ohio. I have already endorsed him for this job (see my upper-right sidebar and find his link in my left sidebar). And he is still very much a fiscal conservative. Understand, fiscal conservatism is what allows the country (or, in this case, the state I have called my own for 44 years) the greatest opportunity for growth and success. Fiscal conservatism allows for the greatest financial growth possible, benefiting everyone from the small-business owner to the hourly employee. We need only look to California and Detroit to see what fiscal liberalism does.

On Mr Kasich’s blogsite, he shows deleterious tax information for Ohio and requests input. First, the deleterious tax information (which, I might add, is incomplete as it doesn’t show the corporate side (but I do believe that was covered in a different post there)).

Today, Ohio has the 7th highest state and local combined tax burden in the nation with taxes consuming 10.4 percent of the state’s income. As Chart 3 shows, this was not always the case. Forty years ago, Ohio had the 5th lowest state/local tax burden in the nation, with taxes consuming 8.7 percent of the state’s income. In just the past 10 years alone, the state has dropped 10 places in the rankings as the population flight accelerated.

From a regional competitiveness standpoint, Ohio is surrounded by states that, generally speaking, have much lower tax burdens. Michigan, Indiana, Kentucky, and West Virginia are all clustered in the middle of the national rankings (27th, 28th, 25th and 29th respectively), while Pennsylvania’s tax burden is 11th highest in the nation, but still lower than Ohio’s.

And now my response for fixes in the tax scheme.

1) Inventory tax.
I have no idea why a business should have to pay taxes on its inventory. But I know businesses have to do a year-end audit of all its inventory for tax purposes. The corporation paid taxes on everything it bought. The corporation will again pay taxes on everything it sells. That is double-dip taxation, which is necessarily passed on to the consumer, as no corporation actually pays any taxes; the consumer pays all the taxes in higher prices for goods. And, in current circumstances, the corporation pays taxes on all the inventory in stock that hasn’t been sent out yet. This is triple-dip taxation, which again impacts the consumer in higher prices.

A great many manufacturing businesses have a peak time during the summer and a lag time during the winter. A financially responsible business will lay off employees in the winter and run down its inventory to the bare bones prior to tax day, and then in the summer mandate heavy overtime. This is another burden on corporations as they have to pay 150 percent of the wage during overtime hours. It is also a burden on the state as the slack time is spent printing unemployment checks. And that means more state employees getting paychecks out of tax dollars to write all those unemployment checks. Which means a greater need for tax dollars.

If the inventory tax were eliminated completely, not only would the triple-dip tax (that consumers must pay) be eliminated but the heavy cost of overtime would be reduced as well. And unemployment, which is likely half or less-than-half of employment checks, would be reduced. And we would need fewer government employees to handle the unemployment checks. And that would mean less state money needed, and lower taxes needed.

2) Business property tax.
I’m sure I got the name wrong. Sue me (blood-turnip?). Why should a business pay a tax on every piece of 1940-era machinery it owns every year? The tax was paid when the business bought the machinery. And, like I said, no business actually pays any tax. It is all added to the price of the product. So the end-user pays this ridiculous tax without even knowing it. This tax just adds to the hidden cost of doing business and harms the competitivity of any business that must pay this tax. Eliminate it altogether, and the loss of tax dollars will be more than made up in the increased business activity.

3)Corporate Profits tax.
As I said, this is double-dip taxation. This money has already been taxed on the purchase and sales of the product. And the employees’ income has already been taxed. Eliminate this entirely. The loss of this tax will be more than made up in an increased revenue pool of income. A business-friendly environment will by necessity increase business activity and will necessarily increase total revenue and income flow. Secondary businesses will be created to fill the needs of the primary businesses and the people surrounding those primary businesses. And government employment (and the tax dollars needed for that government employment) will shrink, putting in place a multiplier effect.

If you create a 3000-employee manufacturing plant, those 3000 employees need to buy groceries and clothes, which will improve the grocery store and department store employment. Those 3000 employees will have families which will need more groceries and food. They will also need transportation and entertainment. And they will need household items. And they will want “pretty” things. And they will desire services, such as repairs or in-home entertainment, or merely garbage removal services.

The elimination of corporate profit tax itself will cause a massive explosion in business as the cost of doing business becomes much less than in surrounding areas.

But let’s not stop at taxes. Let’s tackle true TORT reform. It is far too beneficial for trial lawyers to throw spaghetti at a wall to find out what sticks because too much of that spaghetti sticks and too much of that money goes to the lawyers. If all the ambulance chasers were run out of the state, the cost of doing business would plummet. And more people would earn a much higher living. And the secondary and tertiary business opportunities would increase geometrically.