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00:00:01>> SUPPORT FOR THE STATEWIDE
BROADCAST OF
00:00:07"THE STATE OF OHIO" COMES FROM
THE LAW OFFICES OF PORTER,
00:00:08WRIGHT, MORRIS & ARTHUR LLP.,
HELPING BUSINESSES AND
00:00:10INDIVIDUALS SOLVE COMPLEX LEGAL
PROBLEMS THROUGHOUT OHIO, ACROSS
00:00:12THE COUNTRY AND AROUND THE WORLD
ON THE WEB AT PORTERWRIGHT.COM.
00:00:14AND FROM THE OHIO EDUCATION
ASSOCIATION, REPRESENTING
00:00:16131,000 TEACHERS, SUPPORT
PROFESSIONALS AND HIGHER
00:00:18EDUCATION FACULTY WHO ARE
WORKING FOR GREAT PUBLIC SCHOOLS
00:00:20FOR EVERY CHILD - ONLINE AT
OHEA.ORG.
00:00:24ADDITIONAL SUPPORT FOR "THE
STATE OF OHIO" IS MADE POSSIBLE
00:00:26BY ETECH OHIO.
>> AFTER INTRODUCING A BUDGET
00:00:32THAT WAS DRAMATICALLY DIFFERENT
FROM REPUBLICAN GOV. JOHN
00:00:34KASICH'S SPENDING PLAN, GOP
LAWMAKERS TAKE THEIRS TO THE
00:00:37FLOOR.
AND THE QUESTION OF WHETHER
00:00:39INCOME TAX CUTS CREATE JOBS HAS
DOMINATED THE DISCUSSION ABOUT
00:00:41THE BUDGET FOR MANY YEARS.
TWO EXPERTS IN THE OHIO ECONOMY
00:00:44AND TAX POLICY ATTEMPT TO ANSWER
IT.
00:00:47ALL THIS WEEK IN "THE STATE OF
OHIO".
00:00:49CAPTIONED BY THE
NATIONAL CAPTIONING INSTITUTE
00:00:51--WWW.NCICAP.ORG--
AS PROMISED, HOUSE REPUBLICANS
00:00:54BROUGHT THEIR VERSION OF GOV.
JOHN KASICH'S BUDGET TO THE
00:00:57FLOOR THIS WEEK.
AND AFTER A MARATHON SESSION
00:01:01THAT FEATURED REPEATED AND
LENGTHY BREAKS, LAWMAKERS PASSED
00:01:04A SPENDING PLAN MOSTLY ALONG
PARTY LINES VERY LATE ON
00:01:07THURSDAY.
THE HOUSE'S $61.5 BILLION, TWO
00:01:11YEAR BUDGET INCLUDES 7% INCOME
TAX CUT - DOWN FROM 20% CUT IN
00:01:17GOV. KASICH'S BUDGET, NO 50%
INCOME TAX CUT FOR SMALL
00:01:21BUSINESSES, NO EXPANSION OF
STATE SALES TAX, NO SEVERANCE
00:01:26TAX ON BIG OIL AND NATURAL GAS
DRILLERS, NO MEDICAID EXPANSION
00:01:30BUT INCLUDES AMENDMENT TO TAKE
IT UP IN A SEPARATE BILL,
00:01:35LANGUAGE TO STRIP STATE FUNDING
FROM PLANNED PARENTHOOD
00:01:38FACILITIES, BIG CHANGES TO $13.5
BILLION SCHOOL FUNDING FORMULA,
00:01:44NO AMENDMENT ON SEX EDUCATION.
THE VOTE WAS 61-35.
00:01:49THREE DEMOCRATS - JOHN BARNES OF
CLEVELAND, ZACK MILKOVICH OF
00:01:53AKRON AND BILL PATMON OF
CLEVELAND - JOINED NEARLY ALL
00:01:55REPUBLICANS IN VOTING FOR IT.
RON HOOD OF ASHVILLE WAS THE
00:01:59ONLY REPUBLICAN WHO OPPOSED IT.
THE BUDGET NOW MOVES ON TO THE
00:02:03SENATE, WHICH HOPES TO HAVE IT
COMPLETED BY THE MIDDLE OF JUNE.
00:02:06ONE OF THE MOST FUNDAMENTAL
DEBATES IN THIS BUDGET HAS BEEN
00:02:08THE QUESTION OF INCOME TAX CUTS
AND WHETHER THEY CREATE JOBS.
00:02:12REPUBLICANS HAVE LONG CLAIMED
THEY DO.
00:02:14DEMOCRATS HAVE LONG SAID THEY
DON'T.
00:02:16HERE TO DISCUSS THAT CENTRAL
ISSUE ARE TWO EXPERTS ON THE
00:02:19ECONOMIC IMPACT OF TAX POLICY.
JON HONECK IS A FELLOW WITH THE
00:02:25CENTER FOR COMMUNITY SOLUTIONS,
A PROGRESSIVE-LEANING THINK TANK
00:02:28OUT OF CLEVELAND.
RICHARD VEDDER IS A
00:02:32DISTINGUISHED PROFESSOR OF
ECONOMICS AT OHIO UNIVERSITY IN
00:02:34ATHENS AND IS AN ADJUNCT SCHOLAR
WITH THE CONSERVATIVE AMERICAN
00:02:36ENTERPRISE INSTITUTE, AND HAS
TESTIFIED IN FAVOR OF GOV.
00:02:39KASICH'S BUDGET.
HE JOINS US THROUGH THE
00:02:43FACILITIES OF WOUB IN ATHENS.LET
ME START WITH YOU, DR. VEDDER.
00:02:49CRITICS OF THE IDEA THAT TAX
CUTS CREATE JOBS POINT TO THE
00:02:55BUSH TAX CUTS AND EVEN THE TAX
CUTS IN OHIO IN 2005 AS
00:02:59EVIDENCE THAT INCOME TAX CUTS
DON'T CREATE JOBS.
00:03:00THERE ARE SEVERAL THINK TANKS
-- THE CENTER ON BUDGET AND
00:03:05POLICY PRIORITIES, THE ECONOMIC
POLICY INSTITUTE -- WHO SAY
00:03:09THAT INCOME TAX CUTS TO NOT
CREATE JOBS.
00:03:10WHAT IS YOUR EVIDENCE THAT
INCOME TAX CUTS CREATE JOBS?
00:03:13>> I THINK THE EVIDENCE IS
BASED ON A VARIETY OF HISTORICAL
00:03:18EXPERIENCES AND ON THE BASIS
ALSO OF ECONOMIC THEORY.
00:03:21IT SHOULD BE POINTED OUT THAT
WHILE TAXES MATTER, AND TAXES
00:03:27MATTER A GOOD DEAL, THEY ARE
NOT THE ONLY THING THAT MATTERS.
00:03:31AFTER 2005, FOR EXAMPLE, WE HAD
A FINANCIAL CRISIS THAT
00:03:36OCCURRED THAT HAD VERY LITTLE TO
DO WITH INCOME TAX RATES IN THE
00:03:40UNITED STATES, AND HAD
EVERYTHING TO DO WITH OTHER
00:03:43FACTORS.
SO IF YOU LOOK AT, SAY, THREE
00:03:49OR FOUR YEARS AND SAY, WELL, WE
HAD INCOME TAX CUTS IN THAT
00:03:53PERIOD BUT DIDN'T HAVE JOB
GROWTH, THAT IS IN VERY GOOD
00:03:58EVIDENCE, BECAUSE THERE IS MANY,
MANY THINGS GOING ON AT ONCE,
00:04:02AND IN THIS CASE, THERE WAS ONE
OF THE MOST SERIOUS DOWNTURNS IN
00:04:05THE ECONOMY SINCE THE GREAT
DEPRESSION.
00:04:07YOU LOOK AT THE EVIDENCE ON JOB
GROWTH, ON HUMAN RESOURCE
00:04:12MOVEMENTS, AND SO FORTH, IT IS
PRETTY OVERWHELMING.
00:04:18JUST TAKE THE INCOME TAX, WHICH
IS CENTRAL TO THE KASICH
00:04:22PROPOSAL, A REDUCTION IN THE
INCOME TAX.
00:04:25IF YOU LOOK AT THE STATES IN THE
UNITED STATES THAT HAVE NO
00:04:27INCOME TAX AT THE STATE LEVEL,
AND THERE IS NINE OF THEM THAT
00:04:31HAVE NO COMPREHENSIVE TAX, AND
YOU LOOK AT THE MOVEMENT OF
00:04:36HUMAN BEINGS, OF RESOURCES HIM
INTO AN OUT-OF-STATE, YOU FIND
00:04:39THAT BETWEEN 1990 AND TODAY,
ROUGHLY 9 MILLION PEOPLE HAVE
00:04:44MOVED FROM THE INCOME TAX STAGE,
LIKE OHIO, TO THE NON-INCOME TAX
00:04:51STAGE, I TEXAS AND TENNESSEE AND
WASHINGTON AND ALASKA AND A
00:04:55VARIETY OF OTHER STATES.
THERE HAS BEEN A MASSIVE
00:04:58MOVEMENT OF RESOURCES TO WHERE
THE RETURN ON INVESTMENTS -- IN
00:05:04THIS CASE, HUMAN CAPITAL
INVESTMENT, WORKING, IF YOU
00:05:06LIKE -- ARE THE HIGHEST, AND
THOSE ARE THE STATES THAT DON'T
00:05:12TAX PRODUCTIVE RESOURCES SO
MUCH.
00:05:13I COULD GIVE A LOT OF OTHER
EXAMPLES, BUT I KNOW YOU WANT TO
00:05:17HAVE -- ALLOW THE OTHER
INDIVIDUAL TO GET INVOLVED IN
00:05:21THIS CONVERSATION.
>> ALL RIGHT, DR. JON HONECK IN
00:05:27THE STUDIO, ALONG WITH THE
STUDIES THAT INDICATE THAT
00:05:31INCOME TAX CUTS DON'T CREATE
JOBS THAT I MENTIONED BEFORE,
00:05:32THERE IS ALSO STUDIES THAT SAY,
JUST AS DR. VEDDER IS SAYING,
00:05:38THAT THEY DO CONTRIBUTE TO A
STATE TOSS ECONOMY IN POSITIVE
00:05:41WAYS, THEY ALLOW FOR MORE MONEY
TO GO TO THE STATE GDP TRADE HOW
00:05:45DO YOU RESPOND TO THAT?
>> I THINK WE ARE DEALING WITH
00:05:51COMPLEX ISSUE.
I AGREE WITH DR. VEDDER THERE
00:05:55ARE A LOT OF DIFFERENT THINGS
GOING ON IN A STATE TOSS ECONOMY
00:05:59AT ANY ONE TIME AND STATE
GOVERNMENTS DON'T HAVE A GREAT
00:06:01DEAL OF CONTROL OVER WHAT
HAPPENS IN THE ECONOMY,
00:06:03ESPECIALLY IN THE SHORT TO
MEDIUM TERM.
00:06:05IF YOU LOOK AT THE EXPERIENCES
OF SOME OF THE STATES THAT DON'T
00:06:08HAVE AN INCOME TAX, WE SHOULD
SAY THAT 41 OF THEM DO.
00:06:13BUT LOOK AT THE EXPERIENCES -- A
WIDE RANGE OF EXPERIENCES --
00:06:21TEXAS HAS EXPERIENCED A LOT OF
JOB GROWTH, OTHERS HAVE NOT.
00:06:23FLORIDA HAS -- WAS HELD UP AS
IN THE COUPLE FOR MANY YEARS,
00:06:28AND NEVADA AS WELL.
IT TURNED OUT THAT WHAT WAS
00:06:30GOING ON DOWN WAS A SPECULATIVE
HOUSING BUBBLE THAT BURST AND
00:06:36REVERSE TO SOME OF THOSE
MIGRATION FLOWS.
00:06:37AS WE LOOK AT THE REASONS WHY
PEOPLE MOVE, THAT IS BEEN
00:06:43SUBJECTED TO A LOT OF STUDIES
AND IT IS LIKE OBLIGATED MIX OF
00:06:46REASONS RANGING FROM -- A
COMPLICATED MIX OF REASONS
00:06:50RANGING FROM FAMILY REASONS TO
HOUSING, MOVING TO STATES THAT
00:06:53HAVE CHEAPER HOUSING IT, PRETTY
WELL DOCUMENTED -- MILITARY
00:07:00TRANSFERS, CORPORATE TRANSFERS.
THE PEOPLE MOST LIKELY TO MOVE
00:07:02OUR YOUNGER PEOPLE WHO EITHER
DON'T HAVE A JOB OR ARE JUST
00:07:06ENTERING THE LABOR MARKET, SORT
OF DON'T HAVE THE ROOTS IN THE
00:07:13COMMUNITY THAT OTHER PEOPLE
WOULD HAVE.
00:07:14I THINK IT IS IMPORTANT NOT TO
LOOK AT -- NOT TO LOOK FOR AN
00:07:19EASY FORMULA THAT IF WE CUT
TAXES BY SO MUCH, WE ARE GOING
00:07:24TO GET A RESPONSE IN THE
ECONOMY.
00:07:26A SICKLY, WHAT YOU ARE DOING IS
SHIFTING SPENDING FROM SOME
00:07:31PUBLIC ASK IT OF GOODS, WHATEVER
THAT IS -- OR COULD BE
00:07:35HEALTHCARE, EDUCATION, WHATEVER
ELSE THE STATE IS BUYING, AND
00:07:40SHIFTING IT OVER TO THE PRIVATE
SECTOR.
00:07:41IT IS TOO EASY TO DRAW THESE
SORTS OF BOUNDARIES BETWEEN
00:07:45THAT.
STATE SPENDING DOES HELP TO
00:07:49DRIVE THE ECONOMY.
IF A SCHOOL DISTRICT BUYS A
00:07:53SCHOOL BUS, THEY ARE GOING TO
NEED A MECHANIC TO SERVICE IT,
00:07:58THEY ARE GOING TO BUY GASOLINE,
THEY ARE GOING TO BUY TIRES AND
00:08:01PARTS FOR THAT SCHOOL BUS.
ALL SORTS OF PURCHASING
00:08:06DECISIONS ARE GOING TO BE MADE
AROUND THAT.
00:08:06>> BUT DO YOU THINK THAT THE
QUESTION -- DO INCOME TAX CUTS
00:08:11CREATE JOBS -- DO YOU THINK IT
CAN BE ANSWERED?
00:08:13WHAT IS THE ANSWER?
>> I THINK IT IS DIFFICULT TO
00:08:20ANSWER.
IN SOME CASES THEY MIGHT, BUT IN
00:08:23OTHER CASES THEY DON'T.
I THINK WE SHOULD AVOID AN EASY
00:08:26PRESCRIPTION OR EASY FORMULA
THAT SEEMS TO BE BANDIED ABOUT
00:08:31TOO OFTEN IN COLUMBUS, WHERE WE
THINK THAT IF WE JUST CUT THE
00:08:33INCOME TAX BY A CERTAIN AMOUNT,
WE ARE GOING TO IMPROVE OUR
00:08:40BALANCE SHEET, WE ARE GOING TO
IMPROVE THE ECONOMY NECESSARILY.
00:08:42STATE SPENDING PAYS FOR A LOT OF
IMPORTANT SERVICES THAT ARE
00:08:47VALUABLE.
AS I SAID, EDUCATION,
00:08:50HEALTHCARE, HELP FOR LOCAL
GOVERNMENTS.
00:08:54THAT HAS TO BE WEIGHED AS WELL.
>> DR. VEDDER, DO INCOME TAX
00:09:02CUTS CREATE JOBS?
>> I THINK THE ANSWER IS YES.
00:09:06I DO AGREE, HOWEVER, THAT IS A
COMPLEX -- THAT THIS IS A COMPEX
00:09:13ISSUE.
I AGREE THAT THERE ARE MANY
00:09:14FACTORS AT WORK.
IN SOME CASES, INCOME TAXES,
00:09:18WHATEVER AFFECTS IT MIGHT HAVE
ARE OUTWEIGHED BY OTHER THINGS
00:09:23GOING ON AT THE SAME TIME TO
READ ALL OF THESE QUALIFICATIONS
00:09:25ARE TRUE.
BUT PUBLIC POLICY MAKERS ONLY
00:09:27HAVE A FEW QUIVERS IN THEIR
ARSENAL TO READ -- ONLY HAVE A
00:09:34FEW QUIVERS IN THEIR ARSENAL.
THEY CANNOT MANIPULATE EXCHANGE
00:09:39RATES, THEY CANNOT MANIPULATE
CARROTS, THEY HAVE NO CONTROL
00:09:42OVER THE FEDERAL DEFICIT OR
BUDGET, AND THE ACTIVITIES IN
00:09:47WASHINGTON, WHICH ARE VERY
IMPORTANT TO THE ECONOMY.
00:09:48BUT THEY DO HAVE CONTROL OVER
THEIR EXPENDITURES AND CONTROL
00:09:54OVER THEIR TAX POLICY.
THEY ALSO HAVE CONTROL OVER
00:09:57REGULATORY POLICY.
TAXES ARE A BIG PART OF THE
00:10:02DISCUSSION IN COLUMBUS,
PRECISELY BECAUSE THEY ARE ONE
00:10:07OF THE FEW THINGS THAT PEOPLE IN
COLUMBUS CAN DEAL WITH.
00:10:09OUR STATE HAS HAD A HORRIBLE
PROBLEM OF SLOW ECONOMIC GROWTH
00:10:13, NOT JUST IN THE LAST FIVE
YEARS OR 10 YEARS, BUT FOR THE
00:10:17LAST HALF-CENTURY.
WE HAVE GONE FROM WELL ABOVE THE
00:10:21NATIONAL AVERAGE IN INCOME TO
WELL BELOW THE NATIONAL AVERAGE
00:10:26IN INCOME.
WE HAVE GONE FROM HAVING MORE
00:10:28THAN 40 FORTUNE 500 COMPANIES
HEADQUARTERED IN THE STATE IN
00:10:34THE LAST GENERATION -- JUST A
GENERATION AGO TO HAVING FEWER
00:10:37THAN 30 TODAY.
WE HAVE LOST ABOUT 15 COMPANIES
00:10:40OUT OF THAT LIST.
WE HAVE HAD A FLIGHT OF CAPITAL,
00:10:44A FLIGHT OF LABOR FROM OUR
STATE.
00:10:45THAT REDUCES OUR CAPACITY TO
GROW.
00:10:49WE HAVE TO TRY SOMETHING.
THERE IS A LOT OF THEM."
00:10:53EVIDENCE THAT SHOWS -- THERE WAS
A LOT OF EMPIRICAL EVIDENCE
00:10:59THAT SHOWS THAT PEOPLE ARE
IMPACTED BY TAXES.
00:11:02I USED TO JOKINGLY SAY, WHY
WOULD HOWARD METZENBAUM, AND
00:11:05OHIOAN, DIE IN FLORIDA?
WHY DID GEORGE POINT OF AGE
00:11:12SPENT -- WHY DOES GEORGE VOINO
VICH SPENT HALF THE YEAR IN
00:11:17FLORIDA?
I WOULD NOT BE SURPRISED IF
00:11:21THESE DECISIONS WERE PARTIALLY
TAX-DETERMINED.
00:11:23>> THOSE DECISIONS ARE PROBABLY
INFLUENCED BY WEATHER AS WELL.
00:11:27MOST AVERAGE PEOPLE -- I KNOW
PEOPLE THAT HAVE MOVED TO
00:11:31FLORIDA FROM OHIO AND OTHER
STATES, AND THE FIRST THING THAT
00:11:36GETS MENTIONED IS THE BEACH AND
THE SIGN AND THE WEATHER -- THE
00:11:39BEACH AND THE SUN AND THE
WEATHER.
00:11:43WE SHOULD AVOID AN EASY
PRESCRIPTION HERE.
00:11:44THE FACT OF THE MATTER IS THAT
OHIO'S STATE TAXES, WHETHER YOU
00:11:50LOOK AT IT IN TERMS OF A PER
CAPITA TAX BURDEN OR PERCENTAGE
00:11:54OF INCOME, ARE NOW BELOW
AVERAGE.
00:11:55THEY ARE BELOW AVERAGE.
NOW WE GO UP WHEN WE LOOK AT
00:12:00LOCAL TAXES, BUT ALL TOO OFTEN I
THINK PEOPLE PRETEND THAT THEY
00:12:05DROP FROM THE SKY.
>> THAT IS WHAT I WANT TO GET TO
00:12:09RIGHT NOW.
THE ARGUMENT GOES THAT IS -- AS
00:12:10YOU GIVE MORE INCOME TAX CUTS
AND TAX BREAKS, ESPECIALLY TO
00:12:15THE WEALTHY, THEY WILL BE PAID
FOR THROUGH LAYOFFS OF TEACHERS
00:12:20AND FIREFIGHTERS AND SOME
GOVERNMENT WORKERS, OR THEY WILL
00:12:21BE PAID WITH LEVIES AND TAXES
INCREASED AT THE LOCAL LEVEL.
00:12:26>> IT IS POSSIBLE THAT THAT
COULD HAPPEN.
00:12:29I WOULD ADD THAT WHEN LOCAL
TAXES ARE IMPOSED, THEY ARE
00:12:34USUALLY IMPOSED BECAUSE THE
PEOPLE HAVE VOTED TO LET THEM
00:12:40HAPPEN, PARTICULARLY IF YOU'RE
TALKING ABOUT, FOR EXAMPLE,
00:12:42PROPERTY TAXES AT THE SCHOOL
DISTRICT LEVEL, OR SCHOOL
00:12:46DISTRICT INCOME TAX.
THESE TAXES REQUIRE LOCAL
00:12:49APPROVAL.
AND PEOPLE AT THE LOCAL LEVEL
00:12:53FIELD OF GOVERNMENT SERVICES ARE
BEING IMPAIRED TO AN EXCESSIVE
00:12:56DEGREE, THEN THEY HAVE THAT
OPTION.
00:12:57BUT THE TROUBLE WITH OHIO IS
PRECISELY NOT ONLY DO WE HAVE
00:13:03MODERATELY HIGH STATE AND LOCAL
INCOME TAXES -- VERY HIGH STATE
00:13:09AND LOCAL INCOME TAXES AND
FAIRLY HIGH OVERALL STATE AND
00:13:10LOCAL TAX BURDENS, BUT IT IS AT
THE MARGIN WHERE DECISIONS ARE
00:13:15MADE, AND THE EXTRA TAX PAID ON
EXTRA INCOME IS WHAT IS
00:13:19IMPORTANT.
WE DON'T HAVE AN EXTRA
00:13:21ORDINARILY HIGH STATE INCOME
TAX.
00:13:25THE TOP RATE IS A LITTLE UNDER
SIX PERCENT.
00:13:27THAT IS FAIRLY COMMON.
BUT WE HAVE AN UNUSUAL NUMBER
00:13:31OF PIGGYBACK TAXES AND OUR
STATE.
00:13:35WE NOT ONLY HAVE LOCAL MUNICIPAL
INCOME TAXES, WE EVEN HAVE
00:13:39SCHOOL DISTRICT INCOME TAXES.
THERE ARE SOME PEOPLE WHO HAVE A
00:13:45TOP RATE OF 8.5, NINE PERCENT,
WHEREAS NEXT-DOOR IN INDIANA,
00:13:50THERE WAS A FLAT RATE TAX OF
3.4%, STATE TAXES AND LITTLE
00:13:54OVER FOUR PERCENT, AND IN
MICHIGAN, MINNESOTA SIMILARLY
00:13:59-- I MEAN, IN PENNSYLVANIA
SIMILARLY.
00:14:01OUR BIG NEIGHBORS HAVE GENERALLY
LOWER TAXES, AND ALSO SOME OTHER
00:14:08ADVANTAGES, SUCH AS THE RIGHT TO
WORK LAWS IN BOTH INDIANA AND
00:14:11MICHIGAN, WHICH WILL GIVE THE
EMPLOYERS GREATER LABOR
00:14:16FLEXIBILITY.
WE ARE AT A COMPETITIVE VISIT
00:14:21MANAGE, AND I THINK THAT
GOVERNOR CASEY -- GOVERNOR
00:14:26KASICH USED THIS AS A TOOL TO
MAKE THE INCOME PIE IN THE STATE
00:14:27BIGGER AND PROVIDE MORE INCOME
FOR ALL OHIOANS, OR NEARLY ALL,
00:14:33NOT JUST A FEW.
>> I THINK IT IS IMPORTANT TO
00:14:38REMEMBER, STEPPING BACK AND
LOOKING AT THE BIG PICTURE,
00:14:40THAT TAXES ARE ONLY ONE BUSINESS
COST.
00:14:41OHIO IS NOT AN EXTREMELY HIGH
PLACE TO DO BUSINESS.
00:14:46THERE ARE SOME PLACES IN THE
STATE WHERE IT IS VERY, VERY
00:14:51CHEAP TO BUY LAND, BY BUILDINGS,
HIGHER LABOR -- BUY BUILDINGS,
00:14:57HIRE LABOR.
MANY PLACES WITH REPUTATIONS OF
00:15:03BEING HIGH TECHTARGET FIRM
SUBURBS OFTEN WHERE BUSINESSES
00:15:04INVEST A LOT OF MONEY IN THE
LOCAL SCHOOL DISTRICT AND IF
00:15:08PEOPLE DON'T WANT TO LIVE THERE,
THEY CAN MOVE, AND BUSINESSES
00:15:11MOVE ALSO.
IF YOU LOOK AT PLACES THAT ARE
00:15:16THRIVING ECONOMICALLY IN OHIO,
IT IS NOT YOUR DIRT CHEAP
00:15:18PLACES.
YOU CAN GO TO SOME OF OUR RURAL
00:15:22COUNTIES WHERE IT IS EXTREMELY
COAT -- LOW COST OF LIVING.
00:15:25THOSE ARE NOT THE PLACE IS
CREATING JOBS.
00:15:27ALL TOO OFTEN THE DEBATE ABOUT
TAXES BECOMES A DISTRACTION FROM
00:15:31SOLVING SOME OF THE PRACTICAL
PROBLEMS CONFRONTING BUSINESSES
00:15:34, CONFRONTING EMPLOYERS, AND
CONFRONTING PEOPLE WHO ARE
00:15:39LOOKING FOR WORK.
I AM GETTING TO THE WHOLE
00:15:41WORKFORCE ISSUE, IS THE
WORKFORCE PROPERLY PREPARED TO
00:15:48TAKE THE JOBS OUT THERE, AND
TALKING ABOUT INCOME TAX,
00:15:51SHOULD IT BE A LITTLE LESS, A
LITTLE MORE, ISN'T NECESSARILY
00:15:54GOING TO GET TO A RESOLUTION TO
THAT PRACTICAL PROBLEM.
00:15:57>> BUT IF YOU GIVE PEOPLE BACK
MORE OF THEIR INCOME THROUGH
00:16:02THE INCOME TAX CUT, DO THEY
HAVE MORE MONEY TO SPEND AND
00:16:05STIMULATE THE ECONOMY, WHICH
WILL CREATE JOBS?
00:16:06>> THAT CAN HAPPEN, BUT WE ARE
REALLY TALKING ABOUT A SMALL
00:16:10AMOUNT OF MONEY IN RELATION TO
THE OVERALL ECONOMY, AND AS WE
00:16:17JUST TALKED ABOUT, I THINK MANY
OF THESE LOCAL TAXES, PEOPLE
00:16:19HAVE DECIDED TO IMPOSE ON
THEMSELVES IN SOME CASES BECAUSE
00:16:24THEY FEEL THE STATE IS NOT DOING
ENOUGH FOR EITHER LOCAL SAFETY
00:16:27FORCES OR LOCAL SCHOOL
DISTRICTS.
00:16:31WE HAVE CREATED AN UNFORTUNATE
SORT OF PATCHWORK BUILT IN THE
00:16:35STATE WHERE WEALTHIER AREAS
WILL VOTE TO FUND THE LEVIES FOR
00:16:41SCHOOLS AND SOCIAL SERVICES,
ALL SORTS OF THINGS, AND IMPROVE
00:16:46THEIR QUALITY OF LIFE.
WE HAVE OTHER AREAS OF THE
00:16:50STATE THAT HAVE A VERY LOW TAX
CAPACITY AND LITERALLY CANNOT
00:16:53JUST PASS A LEVY FOR ANYTHING.
THEY ARE NOT GETTING MUCH HELP
00:16:58FROM THE STATE.
AND THE QUALITY OF LIFE SUFFERS
00:17:01IN THOSE AREAS, AND PEOPLE WANT
TO GET OUT.
00:17:03THAT IS THE OPPOSITE KIND OF
MIGRATION THAT DR. VEDDER TALKED
00:17:07ABOUT.
>> I WANT TO ASK ABOUT
00:17:10SOMETHING JUST SAID HERE, THE
INCOME TAX CUT THAT THE HOUSE
00:17:17BUDGET AND CLOSE.
HE ASKED THE DEPARTMENT TO SEND
00:17:21US INFORMATION ABOUT JUST HOW
MUCH THAT WOULD BE PAID FOR THE
00:17:24AVERAGE TAXPAYER IN THE LOWEST
BRACKET, PAYING INCOME TAXES,
00:17:26THE PERSON MAKING 1650 DOLLARS,
IT IS $11 IS WHAT THEY ARE
00:17:34SAVING DUE TO THIS INCOME TAX
CUT.
00:17:36IT GOES UP TO $8,074 FOR PEOPLE
IN THE TOP BRACKET, PBL --
00:17:40PEOPLE MAKING OVER TWO THOUSAND
FIVE HUNDRED DOLLARS.
00:17:44WOULD MOST PEOPLE NOT EVEN
NOTICE THE INCOME TAX CUT THIS
00:17:46SMALL?
>> FOR POOR PEOPLE, $11 IS NOT
00:17:50INCONSEQUENTIAL.
FOR RICH PEOPLE, $1800 IS NOT
00:17:55INCONSEQUENTIAL.
IS IT?
00:17:57I WOULD AGREE THAT THESE ARE
NOT MOMENT TO US -- MOMENTOUS
00:18:05CUTS.
I HAVE ARGUED THAT THEY OUGHT TO
00:18:07BE LARGER.
I THINK THEY OUGHT TO BE ROUGHLY
00:18:10THREE TIMES AS LARGE,
ULTIMATELY.
00:18:12I WOULD AGREE THAT THESE CUTS
ARE NOT GOING TO MAKE OR BREAK
00:18:16THE STATE OF OHIO.
SEVEN PERCENT JUST CANNOT MOVE
00:18:21THE NEEDLE DRAMATICALLY.
20% WOULD MOVE IT MUCH MORE
00:18:24DRAMATICALLY.
NONETHELESS, EVERYTHING IS AT
00:18:31THE MARGIN.
IF YOU LACK 40 BASIS POINTS OFF
00:18:38THE TOP RATE, -- WHACK 40 BASIS
POINTS OFF THE TOP RATE, YOU'RE
00:18:45GOING TO MAKE A BIT OF A
DIFFERENCE.
00:18:45YOU GOING TO MAKE MONEY MENTAL
DEFENSE?
00:18:47-- ARE YOU GOING TO MAKE A
MONUMENTAL DIFFERENCE?
00:18:50NO. BUT THIS WOULD BE THE
OPPOSITE OF WHAT MY
00:18:55DISTINGUISHED COLLEAGUE WOULD
SAY -- I THINK WE OUGHT TO GO
00:19:00FARTHER.
I THINK WE OUGHT TO GO TO THE
00:19:0120%, THE GOVERNOR'S ORIGINAL
IDEA.
00:19:02>> I THINK THAT IS AN
INTERESTING POINT, AND I THINK
00:19:08IT IS WORTH PAUSING AND
REFLECTING ON THE DYNAMICS OF
00:19:10WHAT JUST SEEM TO HAVE HAPPENED
IN THE HOUSE, WHERE THE
00:19:14GOVERNOR, I THINK REALIZING THAT
WE CANNOT SIBLEY ELIMINATE
00:19:20INCOME TAX, NUMBER ONE, AND THAT
EVEN A 20% CUT IN REVENUE HAS
00:19:25TO BE MADE UP SOMEWHERE, HE DID
PROPOSE EXPANDING THE BASE OF
00:19:29THE SALES TAX TO ADDITIONAL
SERVICES, OK, AND HE PROPOSED A
00:19:36SEVERANCE TAX TO MAKE UP FOR
SOME OF THAT LOST REVENUE.
00:19:37AND THEY WERE TAKEN OUT.
WHERE DOES THAT LEAVE US NOW IN
00:19:43TERMS OF ALL THIS RHETORIC
ABOUT GETTING RID OF THE INCOME
00:19:44TAX?
IF A CONSERVATIVE LEGISLATURE
00:19:49APPARENTLY WAS UNWILLING TO MOVE
FORWARD WITH PRACTICAL STEPS --
00:19:52I MEAN, IN TEXAS, IS NOT NOT
JUST THAT THEY DON'T HAVE AN
00:19:54INCOME TAX.
THEY HAVE OIL REVENUE.
00:19:57ALASKA HAS THE SAME THING.
AS A PRACTICAL MATTER, IT IS
00:20:03DIFFICULT FOR ME TO SEE HOW THIS
ACTUALLY HAPPENS.
00:20:04>> "DAYTON DAILY NEWS" HAD AN
ARTICLE THIS WEEKEND THAT SAID
00:20:12THAT THE STATE INCREASED A LOT
-- IT WAS TAX RECEIPTS
00:20:16INCREASED EVEN AS THE INCOME
TAXES HAD BEEN CUT, AND THAT THE
00:20:19ECONOMY IS REBOUNDING.
IS THIS EVIDENCE THAT TAX CUTS
00:20:23ARE WORKING?
>> TAX REVENUES ARE ROBUST, THE
00:20:29STATE IS ENDING ITS FISCAL YEAR
MORE THAN $1 BILLION BETTER OFF
00:20:31THAN THEY SAID THEY WOULD OR
PREDICTED THEY WOULD AT THE
00:20:35BEGINNING OF THE YEAR.
BY THE WAY, I WOULD AGREE
00:20:37COMPLETELY WITH REGARDS TO THE
COMMENTS ON SEVERANCE TAXES.
00:20:41I THINK THE HOUSE SHOULD'VE
PHRASED SEVERANCE SEVERANCE
00:20:46TAXES TO HELP FINANCE THE INCOME
TAX CUTS.
00:20:46-- SHOULD HAVE RAISED SEVERANCE
TAXES TO HELP FINANCE THE INCOME
00:20:52TAX CUTS.
I WILL PROBABLY GET IN TROUBLE
00:20:55FOR SAYING THIS, BUT THERE WAS
PRESSURE PUT RIGHT SPECIAL
00:20:56INTERESTS -- ALL THAT BIG OIL
IF YOU WANT -- TO KEEP THIS FROM
00:21:01HAPPENING.
A MODEST INCREASE IN SEVERANCE
00:21:06TAXES WOULD'VE HAD FAR LESS
DETRIMENTAL ECONOMIC IMPACT
00:21:09THAN SOME OTHER KINDS OF TAXES
THAT WE HAVE.
00:21:11IT WAS A PRACTICAL SUGGESTION
THAT WOULD RAISE SEVERAL HUNDRED
00:21:18MILLION.
I AM NOT DEFENDING THE HOUSE
00:21:19BUDGET PARTICULARLY.
I AM, HOWEVER, DEFENDING THE
00:21:25IDEA THAT INCOME TAXES HAVE A
CORROSIVE INFLUENCE ON THE
00:21:28ECONOMY TO SOME EXTENT AND THAT
IT IS ONE OF THE JEWELS THAT
00:21:35STATE GOVERNMENT HAS TO DO WITH
ECONOMIC STAGNATION.
00:21:36>> IS THE STATE DOING BETTER
BECAUSE OF INCOME TAX CUTS AND
00:21:41THAT SORT OF THING?
ACCORDING TO THIS ARTICLE IT
00:21:46LOOKS LIKE IT, BUT THERE IS
OTHER THINGS INVOLVED, RIGHT?
00:21:48>> I THINK THE STATE IS DOING
BETTER BECAUSE THE ECONOMIC
00:21:54CYCLE TURNED, THE WORST OF THE
FINANCIAL CRISIS IS OVER.
00:21:55WE ARE STILL VERY TIED TO THE
AUTO INDUSTRY.
00:21:59THERE IS AN UPSWING IN THE AUTO
INDUSTRY.
00:22:00THERE IS BETTER CREDIT FOR
PEOPLE WHO WANT TO BUY CARS
00:22:07OFFERED BY GM AND OTHERS.
AND WE ARE RIDING THAT WAVE A
00:22:13LITTLE BIT.
BUT WE HAVE NOT REBOUNDED AS
00:22:14MUCH AS THE REST OF THE COUNTRY.
I THINK THE PRUDENT COURSE OF
00:22:19ACTION IS JUST TO BASICALLY
LEAVE THINGS ALONE, AND SEE
00:22:22WHERE WE COME OUT OF THIS.
>> I WANT TO FINALIZE THIS
00:22:28INTERVIEW HERE WITH A COUPLE OF
THOUGHTS FROM BOTH OF YOU ON
00:22:32SENATE PRESIDENT KEITH FABER
SAYING THAT RATHER THAN THE
00:22:34SEVEN PERCENT PERSONAL INCOME
TAX CUT FOR ALL OHIOANS, HE
00:22:37WOULD RATHER GO BACK TO THE 50%
INCOME TAX CUT FOR SMALL
00:22:40BUSINESSES THAT THE GOVERNOR
ALSO PROPOSED IN HIS BUDGET.
00:22:41THERE WAS AN ARTICLE IN "THE
PLAIN DEALER" IN FEBRUARY
00:22:47SAYING THAT 80% OF BUSINESSES
WOULD NOT BENEFIT TREMENDOUSLY
00:22:50FROM THIS, THAT THEIR SAVINGS
WOULD BE ABOUT $400.
00:22:53THAT IS NOT ENOUGH TO CREATE
JOBS AND HIRE MORE PEOPLE.
00:22:55>> WELL, WE DID TESTIFY ABOUT
THAT PARTICULAR PROVISION.
00:23:02WE THOUGHT IT WAS BASICALLY
OPENING UP A HUGE LOOPHOLE IN
00:23:05THE TAX CODE THAT DIDN'T DESERVE
TO BE THERE.
00:23:08MOST OF THESE SMALL BUSINESSES
-- MANY OF THEM ARE SOLE
00:23:15PROPRIETORS AND THEY ARE NOT
GOING TO HIRE ANYONE.
00:23:17AS YOU SAID, KAREN, THE AMOUNT
AT ISSUE THERE PROBABLY WERE
00:23:21NOT ENOUGH TO STIMULATE EVEN ONE
IN NEW HIRE.
00:23:27AND IT CREATES UNFAIRNESS, I
THINK, IN TERMS OF ONE GROUP
00:23:29GETTING BASICALLY 50% OF ITS
INCOME SHELTERED VERSUS THE
00:23:34AVERAGE WAGE EARNER PAYING 100%
OF HIS OR HER INCOME.
00:23:38IT DID NOT SEEM TO MAKE SENSE TO
US.
00:23:42I THINK THAT IF THE POWERS THAT
BE DECIDE THERE MUST BE A TAX
00:23:48CUT HOW I THINK IT IS BETTER TO
HAVE SOMETHING ACROSS THE BOARD
00:23:53THAT IS FAIR, THAT PEOPLE CAN
UNDERSTAND.
00:23:54>> WHAT ABOUT YOU, DR. VEDDER?
>> SURPRISINGLY, I AM GOING TO
00:24:04AGREE WITH DR. HNONECK TO A LARE
EXTENT.
00:24:10IT IS INAPPROPRIATE POLICY TO
GIVE A TAX CUT TO ONE GROUP OF
00:24:15PEOPLE AND IGNORE THE REST OF
THE POPULATION.
00:24:17IT SMACKS OF FAVORITISM, AND
THEIR IS FAVORITISM, AND THERE
00:24:22ARE SOME ECONOMIC ISSUES
ASSOCIATED WITH GIVING ONE
00:24:25GROUP OF PEOPLE A DIFFERENT TAX
STATUS THEN ANOTHER GROUP OF
00:24:27PEOPLE.
THERE IS ISSUES ABOUT THE
00:24:30DISTORTION OF RESOURCES.
THE TAX REDUCTION FOR SMALL
00:24:32BUSINESSES THE GOVERNOR PROPOSED
WAS PARTLY TO OFFSET SOME OF
00:24:39THE PROBLEMS ASSOCIATED WITH THE
EXPANSION OF THE SALES TAX BASE
00:24:41AND HE ALSO OPPOSED, WHICH
APPARENTLY THE LEGISLATURE WENT
00:24:49UP TO ELIMINATE.
IF THEY ELIMINATE THOSE
00:24:50EXPANSIONS ON THE SALES TAX
BASE, SOME OF WHICH WOULD
00:24:55BURDEN SMALL BUSINESSES, THE
ARGUMENT IN FAVOR OF SPECIAL
00:24:57CUTS ON SMALL BUSINESSES
DECLINES.
00:24:59I THINK ON ECONOMIC GROUNDS IT
WOULD BE BETTER TO GIVE ACROSS-
00:25:04THE-BOARD TAX CUTS.
NOW, I AM NOT COMPLETELY WEDDED
00:25:12ON THIS VIEW AND I CAN BE
CONVINCED OTHERWISE.
00:25:15BUT I AM A LITTLE SKEPTICAL OF
SENATOR FABER, WHO I HAVE A
00:25:20GOOD DEAL OF RESPECT FOR, FOR
HIS VIEW ON THIS, AND IF WE
00:25:25ABANDON THIS INCOME TAX CUT IN
ORDER -- WHICH WOULD ALLOW AT
00:25:28LEAST LOW INCOME PEOPLE TO GET
SOME CUTS, TO GIVE ONLY
00:25:34BUSINESSMEN AND BUSINESSWOMEN
CUTS, IT WOULD BE VIEWED AS
00:25:36TERRIBLY UNFAIR INDEPENDENT OF
ITS ECONOMIC IMPACT.
00:25:38>> DR. RICHARD VEDDER AND DR.
JON HONECK, THANK YOU VERY MUCH.
00:25:46AND THAT'S IT FOR THIS WEEK.
FOR MY COLLEAGUES AT OHIO PUBLIC
00:25:51RADIO AND TELEVISION, THANKS FOR
WATCHING.
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00:26:00AND PLEASE JOIN US AGAIN NEXT
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Note : Transcripts are compiled from uncorrected captions