I’m an Ohioian and I was all for Blackwell until I saw an article that stated he is talking about being on McCains ticket in ’08. Now I’m hesitant.

Blackwell has some big ideas, but I honestly do not see how the numbers will work out. In a speech I was present at, he said he wanted to use a statewide tax (I would suppose income) to support school districts so they would not have to rely on property taxes. This is fine, but I do not see how he will do this AND lower Ohio’s income tax from the top rate of 8% to a flat rate of 3%. It must be doable because both Illinois and PA. had flat rates of about 3.05% (I know this from personal experience of doing tax returns for those states), but I wonder whether they use property taxes for schools?

Blackwell will have to cut services to make do with such a rate, but I do not think that is politically viable due to the General Assembly. Blackwell seems to have some vague hope that if he cuts taxes then capital will flood back into the state (Laffer Curve), which I think is right, but it will take some time. Since he cannot run a deficeit something will have to give.

Also, if Blackwell goes for the 3% flat rate it is true that a lot of people will get a tax decrease, but one should also note that a lot of lower income people, by my rough calculations anyone/any family making less than $42,000 will get a tax increase (Who gets the tax increase can be manipulated by standard deductions, but this is about right). Of course no one will want to talk about that, but that is what always happens when one goes from a progressive system to a flat tax.

My numbers concerning the $42,000 and under will get a tax increase are correct for single people without dependents. The number will go up for couples and people with dependents. I’m not going to do the math on a family of 4, but it would not surprise me if the number were not around $50,000-$55,000. Anyone who wishes to do the math just take the income ($55,000 or whatever), subtract $1,350*4, look at the tax table, find the tax owed, then subtract $80, then take the tax owed and divide it into income (the $55,000). If Blackwell is elected I expect the flat tax will become quite contentious.

Steve, you seem to have forgotten what the Laffer Curve is. The Laffer Curve, invented by Arthur Laffer, illustrates the relationship between tax rates and tax revenues. Reading the "curve" would suggest that at a certain point an increase in tax rates will result in a decrease in revenue (or, to put it in another form, a decrease in tax rates will also have an increase in actual revenues). The idea is that people have an incentive (or disincentive) to work based on the tax rates. But beyond a certain interpretation of the Laffer curve that might suggest a possible relationship (I suppose you could add a few other theories in there and say "and thus when people have more money and work harder they have more to place in capital investment..."), you do not really have anything to say that the Laffer Curve = capital inflow into Ohio. The Laffer Curve is SIMPLY a theoretical relationship between tax rates and revenue (not a predictor of economic growth), and it is still, to the best of my knowledge, highly coneptional. We do not know what rate (T) would be the "best" tax rate (or at least could not measure it permanently as circumstances change).

Finally, I note your comments on the General Assembly to be poorly informed. There is actually significant support within the GA for a flat tax; it has been the Governor that has not supported the matter.

Sonya:

I am pretty sure I know what the Laffer Curve is, but I did not explain it fully so I am sorry for the confusion. Here is how it applies to Blackwell’s tax plan. Ohio needs X amount of dollars for revenue for social programs that must continue for political reasons. Blackwell thinks he can reduce the marginal rates, or impose a lower flat rate, and this will result in the same revenue, or more revenue as the higher tax rates is currently bringing in because capital will be attracted to the State. I think this is correct, but the loss in revenues due to a decrease in tax rates will not be made up by the increase in capital within a fiscal year. Since Ohio has a Constitutional amendment forbiding a defecit this lag is important. It means that social programs will have to be cut until the increased revenues brought about by additional capital start to flow, which I think will take a while.

If a flat tax had such strong support in the general assembly surely it could be passed over Taft’s veto?

So what is bad about cutting back some of these so called "social programs." (Most of which is nothing more than pork.)

Lincoln Hawk:

I do not think there is anything bad with cutting back these programs. If you read my post in comment two you would see that I said such cuts in programs would not be approved by the General Assembly. I doubt the General Assembly that passed a prescription drug plan for seniors a couple of year will suddenly cut it back. Ohio has gotten in its mess because the General Assembly has enacted all kinds of programs and increases in funding. Why would anyone think they will suddenly change course and start cutting programs to the bone?

If a flat tax had such strong support in the general assembly surely it could be passed over Taft’s veto?

I wasn’t aware that something was not considered to have "strong support" unless it had a 2/3 majority in both houses of a legislature… I guess I would consider 51% of a house to be pretty strong support in that house. I don’t think Sonya said it was near unanimous support.

Dominick:

I bet if you saw some poll that stated 51% of Americans supported abortions, or welfare, or social security you would not argue that that position had "strong support". A bare majority is NOT strong support, it is a bare majority. Sonya was arguing that Ohio would have the flat tax if not for Taft, but I do not think this is the case. Anyways, even if politicans did support such a tax, they might be emboldened to say such things because they know that flat tax is not a possibility at this point.

I think if Blackwell is elected he will have quite a fight on his hands in order to change to a flat tax system. Sonya would have you believe that as soon as Taft leaves and Blackwell is elected Ohio will have a flat tax, which is almost surely not the case.

Steve,

You are just nit-picking and playing semantics. 51% of a legislative house is enough to pass a bill. That’s "significant support" as Sonya termed it. It may be a "bare majority" as you term it, but a bare majority is all that is needed to pass a bill in most legislatures, and that makes 51% a pretty powerful total. 51% of the public taking a firm position on abortion may not be "significant support", but then the public tends to not get to decide that issue directly, do they? Now, 51% of the U.S. Supreme Court taking a firm stance on abortion? Well, that would represent significant support for that position, wouldn’t it?

Frankly, I would consider the term "significant support" in regard to a legislature to even mean less than 51% but enough votes that the issue could cause considerable debate.

Furthermore, it seems, based on your comments, that you have no direct knowledge of the General Assembly’s mood on the issue. You simply think it will be controversial based on your understanding of Blackwell’s flat tax proposal (a proposal which I suspect you misunderstand, but I’ll get to that later). So you can’t really counter Sonya’s point, except that you think the GA simply would have pushed its agenda through and overridden a Taft veto if they wanted to. But politics is rarely that simple, is it? A complete restructuring of the state’s tax system is unlikely to be attempted when there is vocal and aggressive disagreement on the issue from the executive branch, particularly if the governor is from the same party as the majorities in the legislature. It becomes politically risky for legislators to stick their neck out on the issue. So some legislators who may support the idea in principle will not vocally support it in the face of a pitched battle against the executive. Conversely, if the executive branch wants to lead on the issue, you may find many more votes for it will emerge.

As for the proposal itself, I must admit that I don’t have a detailed analysis of it. Blackwell’s website says that he wants to implement it over four years with a target rate of 3.25%. Blackwell was part of Jack Kemp’s commission that studied the tax system maybe 10-15 years ago. That commission determined that the best system of taxation would be a flat tax with a healthy initial deduction to prevent the regressiveness that you allege. The infamous Steve Forbes plan allowed, I believe, for the first $35,000 that a family of four made to be tax-deductible. Thus, the poorest Americans would pay no income taxes at all.

Given Blackwell’s frequent and vocal support of the Kemp commission’s findings, I would expect that his plan maintains the same sort of initial deduction. Perhaps not, but I’d be willing to bet that it would be negotiable in the legislative process even if it meant that the target rate would have to be raised in order to compensate.

I would agree that changing the tax system will not likely be a walk in the park for Blackwell. But I didn’t see anything in Sonya’s statement to suggest that she thought it would be simple either. She simply pointed out that Taft has been the primary opponent to the issue, a point which you have yet to debunk. You seem to have some bizarre need to be right about every aspect of every comment you make even when you have no direct knowledge of the issue on which you are asserting an opinion.

Clint, I think you are about to be unemployed by 7:30 pm.

Thank you Domenick, I was unable to respond and you did so nicely. Anyone with experience around a legislative body would probably say that "strong support" is very different from a majority of any percentage. Like it or not, there are a few key players in the Legislature. Moreover, because of the various interests and the value of working relationships I would argue that you can have "strong" support in a legislature with a very small number of players -- if they are clever and if they have a particular measure of power.

For starters, most members of the Assembly are not going to understand the nuances of tax reform; this is not to say that they are unintelligent people, just that they have different pursuits. The retired teacher who is married to a farmer is more likely to be on the education or agriculture committees, whereas you might find a tax attorney and a small businessman on the ways and means committee. Ask the first person to vote for tax reform, and he is probably going to follow the lead of someone else -- perhaps the caucus leadership, perhaps another member he trusts, perhaps a lobbyist, or even a staff member or a constituent. There are thousands of bills introduced in any GA. To think that any legislator reads (much less understands) every one of them would be hopelessly naive.

In reality, it doesn’t take 50% of the body to pass a bill here in Ohio (where there is a supermajority held by Rs), it takes the support of the power players or a majority of the republicans to agree to bring it to the floor -- where others will agree to go along with the rest of the party (You don’t have to like this, but it is true). Thus, I would suggest that in some cases 5 supporters might be "strong" support (say in the Senate) despite the fact that 55 might actually be completely ineffective (in the House), where there is no way to "force" a vote if the Speaker/leadership do not want an issue to come up for a vote.

Steve, you do yourself a disservice when you try to (improperly) force a pragmatic real-world example to fit within the confines of a theoretical example that you try to give. It’s like you say "Experience A proves theory B" == even when A and B actually are very, very different. To the people who point out the problem with your "experience A" scenario, you try to come back and say "no, I am right, ’b’ really is the proper theory." And to those who question your interpretation of "B", you cite the first part of your conversation "A". Only, what you can’t seem to grasp is that your A’s and B’s so often conflict that they are stand alone statements rather than arguments. The reader is left without knowing what to do: let you continue to believe in your own unfailing acumen, or try to argue with a man as irrational as any Frenchman. It is quite painful, really; especially when you refuse to concede a point ever.

Steve doesn’t concede points. He just ends his involvement in a discussion when he is beaten. As he has here.