Previously on WMD, we talked about the current theme of reducing the income tax and just how me might approach the issue of reducing the tax burden in Ohio without putting undue strain on the budget. I think commenter "H" has a plan that is certainly worthy of strong consideration:
First, reduce Ohio estate tax and Ohio capital gains tax because we have a massive capital flight problem. The state cannot do anything without keeping capital in the state. These are much easier tasks because the entrepreneurial capital is already small and we're desperate to keep it and grow it. (Hence the hopeful point: the tax problem is itself small and solvable).
Second, the much larger problem: reducing Ohio's income tax.
This tax is so enormous that it is a much larger problem to solve. Yes, long term, the income tax strangles Ohio business and capital and contributes to population flight and capital flight. But so long as big government has income, it will grow.
I sympathize with LargeBill's implied point: that cutting taxes to grow the economy will first require a reduction in the size and cost of government. Right on!
To get there, the percentage of the Ohio economy that government sucks up must be reduced. Big government types may scream no cuts in services! Politically, they may have a point that service cuts are unpopular.
Therefore, to continue to reduce Ohio's reliance on the income tax and the size of Ohio's government we must advocate freezes and squeezes, limits and restrictions. If we just reduced the growth of government services to 1% less than inflation, we'd save 25% in 20 years. If we froze department budgets to zero growth, we'd effectively reduce government's size by 40% in a decade.
If income tax reductions matched the lower size of government and if more economic growth created a bigger GDP pie in Ohio (assume an extra 10% growth over a decade from lower taxes), then getting rid of Ohio's income tax would be doable without any cuts in nominal dollars: just letting inflation and regular economic growth outrun the restricted size of government.
That's the plan. The plan works.
There is much merit in this proposal...
