Monday, April 11, 2005


Ohio taxes: Ready, fire, aim . . . and Niquette delivers a steaming shitpile again

The Republicans in Columbus are so sure their tax overhaul will provide the "long-missing" stimulus to business that, hey, they may even get around to studying whether it's going to work . . . after they get it passed.

But what do the experts think? We'll get to how Mark Niquette answers the question in the pages of the Dispatch below.

First, however, before one can determine if the tax shift is a solution, one has to agree on the problem. We have to confess that we've suffered from a knee-jerk response that we suspect a lot of the politicos and pundits have been plagued by, namely, the loss of manufacturing jobs in Ohio. Indeed, over 200,000 manufacturing jobs (and the relatively high wages and benefits that tended to go with them) have been lost in just the last few years.)

But, a tip-o-the-hat to Bill Callahan for finding something that throws an enormous wrench into this conventional wisdom. He quizzes readers (using data from Site Selection via Donald Iannone's fascinating economic development blog):
Guess which state ranked...
-- fourth in location of new manufacturing facilities (256 projects)
-- first in manufacturing facility expansions (714 projects), and
-- fifth in location of other new corporate facilities ("offices, headquarters, distribution centers, research and development facilities, speculative offices, speculative industrial buildings, mixed-use facilities and hotels" -- 879 projects)?

Why, yes, it's Ohio...
Callahan sums up the situation pretty well:
So contrary to what we keep hearing about our "unfriendly business climate", Ohio actually seems to have been very attractive to corporate decision-makers compared to other states. Gee, they can't be all that worried about our tax system, can they?
Beyond the Site Selection data, the truth is that since the days of when George Voinovich was governor, the administration and the General Assembly have chased after every pro-business panacea that was vetted by the Business Roundtable, the Chamber and the Buckeye Institute. (Old timers might remember Voinovich and his Republican leaders in the Statehouse moaning about how Ohio's Workers' Compensation system was the "Silent Killer of Ohio Jobs.") Every two years the Republicans have come up with a new tweak to some tax or regulation that was "killing" Ohio's jobs.

As cynical as we got about some of this, the Site Selection data might suggest that some of the changes worked. But again it should be noted that there are no studies we know of that show why Ohio is attracting these businesses.

Regardless, the Site Selection ranking clearly suggests that the problem facing Ohio isn't really about being more "business oriented." On the contrary, it seems to us that it suggests that the state should be more "worker oriented." Some things that come to mind are a better focus on education including adult education, remedial skills programs, tuition credits, etc.,

Now back to Niquette and his story. The Dispatch editors gave the story an intriguing subhead that asks,
"Will the broad array of cuts and a new business tax spur job growth? Who knows?"
We're glad the paper finally asked that question, because they for one don't. But that hasn't stopped the paper from writing about the issue for nearly three months. We guess that given the Dispatch's taste for the "he said, she said" type of writing that passes for journalism on Third Street, the editors never really worried about such things as, "Will the tax change work?"

But, Niquette still couldn't be serious about getting an answer because he wastes the first half of the story checking in with companies like Honda and Ford that have an obvious horse in the horse.

And, it's not until the 12th paragraph do we find out that:
The state is paying a Massachusetts firm to forecast the effects of Taft's changes and doesn't expect to release its report for several weeks.
Several weeks? Say, doesn't that mean the report might arrive too late to be considered by the legislature? Why, yes it does! Hmm . . .

Then Niquette introduces some quotes from someone who is meant to appear as an independent, academic type: William F. Fox from the Univ. of Tennessee. (For some inane reason, Niquette felt compelled to point out the Fox was an Ohio native.) But Fox has a horse in the race, too, which Niquette conveniently leaves out. Our brief googling shows that Fox is already a strong advocate for the kind of "gross receipts tax" contemplated for Ohio. He is also apparently a paid consultant to the State of Hawaii which has such a tax in place. We suspect, too, that Fox has already served as a consultant on the Ohio proposal.

The only real "independent" in Niquette's entire story is William A. Raabe, who is described as a tax professor at Ohio State University's Fisher College of Business, and whom OSU describes as "one of the country's leading tax educators and authors."

And, despite the article's subhead, Raabe says he knows whether the Taft/Republican plan is sound thinking:
"Is this package of ideas the right way to go? Generally, no.''
That bottom line is that out of 1,000-word story, Niquette interviews only one guy that has the credentials and the independence to be asked to weigh in on the issue, and that one guy says Taft's idea sucks. And they pay Niquette for this?

The fact is that Taft and the Republicans have had months to prove their case for the gross receipts tax and they have yet to do it. This story is proof of that. That won't stop the Republicans from jamming it down everyone's throat, and no one, least of all the Dispatch, is serious about holding them accountable.


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