Big Ideas Will Renew Us
Ohio Governor Kasich: “Big Ideas Will Renew Us”
At the time of Governor John Kasich’s election in 2010, the state of Ohio had an $8 billion budget deficit. Today, thanks to cost reductions and tax reforms, the state has a $2 billion surplus. Just last year, the state of Ohio earned the inauspicious distinction of being forty-fourth worst state in which to do business. Today, it is ranked twenty-second, a major improvement in just one year. Ohio currently has an unemployment rate of 7 percent, gradually falling from 10.6 percent since 2009 – 2010. As the governor is quick to point out, however, the positive gains have only just begun. The momentum is just starting. Promoting a favorable environment for Ohio businesses is step one. Enticing other companies, people, and their personal incomes to relocate to Ohio is step two
Following up on a promise to phase out personal income taxes, the governor’s 2013 budget calls for three successive reductions in the tax rates. In each of the first two years, the cut would be 7.5 percent. In the third year, there would be a 5 percent reduction in rates. Taxpayers would save an estimated $2.1 billion over the three years. The change reduces the top marginal rate from 9.9 percent to 4.7 percent.
Kasich’s budget also proposes a 50 percent income tax cut on the first $750,000 of income earned by small businesses. Since Ohio doesn’t have a corporate income tax, this proposal would benefit business owners whose business income shows up as part of their personal income tax returns
Emulating the traits of a successful person will greatly improve the chances of your own success. This adage holds true not only in our personal life, but can also be applied on a far greater scale: the economic success of a state. Nine states in the U.S. have zero personal income tax. They also have reduced regulations on business, and have little or no corporate income tax. Needless to say, business is the engine that drives the economy, and small businesses provide the greatest number of new jobs.
Consider the following data, compiled from Chief Executive Magazine‘s list of the best and worst states in which to do business. Of these nine no-income-tax states:
- Seven fall into the top 50 percentile
- Four are in the top 10 percent
- Seven have either maintained or improved their rating since last year
- Seven of the nine have an unemployment rate below the national average, ranging from 4.3 percent to 7.5 percent.
In reading these stats, you have to take into account the fact that some of these states had never instituted personal or corporate taxes, so they would naturally rank higher. Others have only begun their trek toward attaining that coveted #1 spot currently held by Texas, which is ranked as the best state in the nation in which to conduct business. To this end, these states have totally eliminated the personal income tax, and significantly reduced many others. They have also brought the level of business regulations under control.
Governors with vision embrace this roadmap to success. Some governors may think increasing taxes and spending more is the answer. Governor Kasich does not, and the numbers and approaches outlined above clearly show that he is on the right path.