Tuesday, October 21

Update: Ohio's Problem

Back in March I wrote "'Free Trade' is Not Ohio's Problem" as the Democrat candidates were pandering to voters in Ohio blaming NAFTA and free trade for Ohio's high unemployment. I placed the blame of Ohio's problems on Ohio (The Ohio State Government):
One thing that has not come up while Senators Obama and Clinton have been blaming Ohio's problems on NAFTA, is that perhaps, that Ohio's problem are more the result of poor State Governance. You see, if NAFTA is such a bad deal, then why isn't the whole country suffering? Why is Ohio ranked so poorly?
Since 1970, Ohio's share of the nation's personal income has declined from roughly 5.3% to under 3.8% today. In the first quarter of 2005, Ohio had the fifth highest unemployment rate in the U.S. at 6.2% versus the overall unemployment rate of 5.3%. Meager Ohio employment growth of 0.3% through the first quarter placed the state third-to-last nationally, far behind the U.S. overall rate of 1.7%. With falling relative incomes, high unemployment and poor job growth, it is no wonder that people are voting against Ohio with their feet. State-to-state migration shows Ohio losing residents, while total population growth of 0.2% ranks it a dismal 47th in the nation. - Opinion Journal, July 2005
I still think that Ohio's problems are mainly the state's and not the Federal Government's responsibility to fix. Really, should Ohio get preferential treatment over the other states?

Should the Government waive Federal income tax for corporations that relocate to Ohio in an attempt to bring jobs there? How would other states like that? Not very fair is it? However, what can be done is for Ohio to waive their state income tax for new businesses that relocate there. Or better yet, why not reduce business taxes in Ohio to attract new businesses as well as give those currently there an incentive to stay.

However, the Governor, Democrat Ted Strickland, does not plan to do any of that. Instead, he wants to increase the tax burden on his citizens:
STEUBENVILLE, OH -- Ohio Governor Ted Strickland wants the state’s supreme court to reinstate a tax on groceries that was struck down by an appeals court. - WTRF
For a state whose population is suffering from high unemployment and high expenses, this is an odd path for the Governor to try and increase State Revenue. Just think who this tax is going to hurt the most, not the rich, it will hit the poor the most. Taxes that have the greatest effect on those earning the least are called regressive taxes:
A value-added tax or other sales tax on food and other essentials such as clothing, transport, and residential rents can be regressive. Since the income elasticity of demand of food is usually less than 1 (see Engel's law), it tends to take up a higher percentage of the budget of a person or family with a lower income. - Wikipedia
Here is where Senator Obama's socialistic 'spread the wealth' comes into play in that this tax will take money away from the poor, and then redistribute it back to the poor as the Government (In this case Democrats) sees fit. Unfortunately, money is lost in the process through inefficiency and provision of the wrong types of services. So why not just let people keep this money to use as they think they need to use it? Maybe the Governor didn't get Senator Obama's message that they only intend to tax the rich. Or is this a Democrat bait and switch?

Either way, it stinks and this is one reason why Ohio has problems. (Bad State Government) And I truly doubt that a President Obama would fix Ohio's jobs problems. On the bright side, there are many jobs available in this country. However, families need to accept that to get them they will need to move out of Ohio to follow where the businesses have gone. Mainly to friendlier US States. Those states also happen to be friendly to new residents as well.

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