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00:00:00BROADCAST OF "THE STATE OF
OHIO," COMES FROM THE LAW
00:00:03OFFICES OF PORTER, WRIGHT,
MORRIS, AND ARTHUR LLP, HELPING
00:00:07BUSINESSES AND INDIVIDUALS SOLVE
COMPLEX LEGAL PROBLEMS
00:00:09THROUGHOUT OHIO, ACROSS THE
COUNTRY, AND AROUND THE WORLD.
00:00:12ON THE WEB AT PORTERWRIGHT.COM.
AND FROM THE OHIO EDUCATION
00:00:17ASSOCIATION, REPRESENTING
121,000 TEACHERS, SUPPORT
00:00:20PROFESSIONALS, AND HIGHER
EDUCATION FACULTY COMMITTED TO
00:00:23THE SUCCESS OF EVERY CHILD.
ONLINE AT OHEA.ORG.
00:00:28>> A CONDEMNED INMATE DIES BY
HIS OWN HAND JUST THREE DAYS
00:00:33BEFORE HIS SCHEDULED EXECUTION.
GOVERNOR KASICH SUGGESTS HE'S
00:00:36LOOKING INTO NEW OPTIONS ON
MEDICAID EXPANSION.
00:00:39AND TWO ECONOMIC EXPERTS DIG
INTO THE STATE BUDGET, AND HOW
00:00:42IT WILL SPARK ECONOMIC
DEVELOPMENT -- OR IF IT WILL.
00:00:46ALL THIS WEEK IN "THE STATE OF
OHIO."
00:00:49CAPTIONED BY THE
NATIONAL CAPTIONING INSTITUTE
00:00:50--WWW.NCICAP.ORG--
00:00:51>> JUST THREE DAYS BEFORE HE WAS
SET TO BE, CUTED, A CONDEMNED
00:00:55KILLER HANGS HIMSELF IN THE
PRISON AT CHILLICOTHE.
00:00:59A CORONERCIES PRELIMINARY
AUTOPSY RESULTS ON 44-YEAR-OLD
00:01:04BILLY SLAGLE ARE CONSISTENT WITH
SUICIDE BY HANGING.
00:01:08BUT MORE TESTS ARE NEEDED BEFORE
A FINAL CAUSE OF DEATH IS
00:01:10ESTABLISHED.
SLAGLE WAS TO DIE THIS WEEK FOR
00:01:12THE MURDER OF HIS 40-YEAR-OLD
NEIGHBOR, MARI ANN POPE, WHILE
00:01:16SHE WAS BABYSITTING IN 198 HIS
CASE WAS UNUSUAL BECAUSE THE
00:01:23CUYAHOGA COUNTY PROSECUTOR HAD
APPEALED FOR KLEMMYCY, SAYING
00:01:27THAT UNDER CURRENT LAW SLAGLE
LIKELY WOULD HAVE BEEN SENTENCED
00:01:30TO LIFE WITHOUT PAROLE.
GOVERNOR KASICH WENT ALONG WITH
00:01:35THE PAROLE BOARD'S
RECOMMENDATION AGAINST KLEMMYCY,
00:01:38BUT SLAGLE'S LEGAL TEAM WAS SET
TO ASK FOR A DELAY BECAUSE OF
00:01:42NEW INFORMATION IN THE CASE AND
SLAGLE DIDN'T KNOW ABOUT THAT.
00:01:45SLAYING THE IS THE SECOND INMATE
FACING EXCUSE TO ATTEMPT SUICIDE
00:01:49SINCE OHIO RESTARTED EXCUSES IN
1999.
00:01:51BUT HE IS THE FIRST ONE TO KILL
HIMSELF.
00:01:53THERE HAVE BEEN AT LEAST THREE
OTHER DEATH ROW SUICIDES
00:01:57NATIONWIDE THIS YEAR.
HEARINGS ON A BILL THAT WOULD
00:02:00REFORM BUT NOT EXPAND MEDICAID
IN OHIO ARE LIKELY TO START THIS
00:02:04COMING WEEK.
BUT GOVERNOR KASICH SAYS HE'S
00:02:07STILL PUSHING FOR EXPANSION.
AND HE HE SAYS HE WANTS TO GET
00:02:10THE LEGISLATURE TIME TO DO ITS
WORK AND IN HIS WORDS, PRODUCE
00:02:14THE EXPANSION.
BUT HE TOLD ME AT A JOBS
00:02:16ANNOUNCEMENT IN WILLIAM MINGTON
THIS WEEK THAT HE DOESN'T KNOW
00:02:20WHAT POWER HE MIGHT HAVE WITH AN
EXECUTIVE ORDER.
00:02:23>> I'D HAVE TO -- YOU'D HAVE TO
TALK TO ALL OF MY LEGAL COUNSEL
00:02:26AND MY LEGISLATIVE DIRECTORS ON
THAT SUBJECT.
00:02:28BUT WE LOOK AT ALL OPTIONS, LOOK
AT ALL OPTIONS.
00:02:32>> ARE YOU TALKING TO YOUR LEGAL
COUNSEL ABOUT THAT?
00:02:34>> MAYBE.
>> LAST MONTH, THE GOVERNOR SAID
00:02:37HE FELT MEDICAID EXPANSION WAS,
QUOTE, A MATTER OF LIE AND
00:02:40DEATH, AND AGAIN QUOTING HIM,
INEVITABLE.
00:02:44REPUBLICANS LEADERS SAY THEY
HOACH TO HAVE A PACKAGE OF BILLS
00:02:49ON MEDICAID REFORM TO VOTE ON
THIS FALL, BUT THERE IS STILL
00:02:53STRONG OPPOSITION TO EXPANSION
AMONG CONSERVATIVE LAWMAKERS.
00:02:56VOTERS REJECTED ABOUT 2/3 OF THE
19 SCHOOL TAX ISSUES IN SPECIAL
00:03:00ELECTIONS AROUND OHIO THIS WEEK.
ABOUT A FOURTH OF OHIO'S
00:03:02COUNTIES HAD SPECIAL ELECTIONS
ON TUESDAY, WITH 28 TAX ISSUES
00:03:06ACROSS 23 COUNTIES, INCLUDING 19
SCHOOL ISSUES.
00:03:10UNOFFICIAL RESULTS FROM COUNTY
ELECTION BOARDS SHOW VOTERS
00:03:14REJECTED 13 SCHOOL ISSUES AND
APPROVED SIX.
00:03:17THAT 32% PASSAGE RATE IS ABOUT
THE SAME AS THE APROOFL RATE IN
00:03:21THE SPECIAL ELECTION LAST
AUGUST.
00:03:24MEANWHILE, TWO REPUBLICAN
LAWMAKERS ARE WORKING ON A BILL
00:03:26THAT WOULD ELIMINATE SPECIAL
ELECTIONS IN AUGUST AND IN
00:03:30FEBRUARY.
REPRESENTATIVES JOHN BECKER OF
00:03:32UNION TOWNSHIP NEAR CINCINNATI,
AND JOHN ADAMS OF SIDNEY IN
00:03:35WESTERN OHIO SAY SPECIAL
ELECTIONS COST MORE THAN
00:03:39NONSPECIAL ELECTIONS AND PUT A
BIG BURDEN ON ELECTIONS
00:03:42OFFICIALS TO BRING IN POLL
WORKERS.
00:03:44THEY SAY THEY WILL INTRODUCE A
BILL TO REPEAL SPECIAL ELECTIONS
00:03:47THIS FALL.
AND THE OHIO STATE FAIR IS OVER
00:03:50FOR ANOTHER YEAR, ENDING WITH
SOME MONEY RECORDS IN THE ANNUAL
00:03:53SALE OF CHAMPIONS.
THIS YEAR'S AUCTION OF THE
00:03:57FAIR'S TOP LIVESTOCK INCLUDED
NOT JUST BIG MONEY, BUT ONE OF
00:04:00THE BIG NAMES IN OHIO POLITICS
-- BUT NOT NECESSARILY A LEADING
00:04:03NAME IN AGRICULTURE.
>> AND HERE IS OUR BUYER, MARK
00:04:08KVAMME, DID I YET THAT RIGHT?
YOU'RE FROM WHERE?
00:04:10>> SUNBURY, OHIO.
>> WHAT DO YOU DO?
00:04:14>> I'M IN THE INVESTMENT
BUSINESS.
00:04:16>> HE'S THE BILLIONAIRE
CALIFORNIA TECH INVESTOR WHO
00:04:19MOVED TO OHIO TO BE THE FIRST
HEAD OF GOVERNOR KASICH'S
00:04:22CONTROVERSIAL JOB CREATING
ENTITY, JOBSOHIO.
00:04:24HE SET A RECORD BID FOR THE
GRAND CHAMPION GOAT.
00:04:27HE ALSO BOUGHT THE CHAMPION
BARROW AND RESERVE GRAND
00:04:31CHAMPION STARE, SPENDING $9 ,500
ON THOSE THREE AUCTIONS.
00:04:39HE LEFT JOBSOHIO LAST YEAR SAID
HE AND HIS WIFE BOUGHT A FARM IN
00:04:43OHIO RECENTLY.
THE SEAL BROUGHT IN $344,700,
00:04:48WITH $265,000 OF THAT GOING TO
SUPPORT YOUTH AGRICULTURE
00:04:52PROGRAMS.
THE STATE BUDGET IS STILL A
00:04:53NEWBORN, JUST OVER A MONTH OLD,
BUT IN THAT MONTH ANALYSTS HAVE
00:04:56BEEN LOOKING THROUGH THAT
3,700-PAGE DOCUMENT TO SORT
00:05:00THROUGH EXACTLY WHO IT WILL
AFFECT, THOUGH THE BEST ANSWER
00:05:04IS STILL EVERYONE.
THE BUDGET INCLUDES AN
00:05:06ACROSS-THE-BOARD INCOME TAX CUT
THAT WILL BE 10% IN ITS THIRD
00:05:10YEAR, WITH A 50% INCOME TAX CUT
FOR SMALL BUSINESSES.
00:05:13IT ALSO INCLUDES A HIKE IN THE
STATE SALES TAX FROM 5.5% TO
00:05:185.75%, ALONG WITH SOME CHANGES
THAT WILL INCREASE PROPERTY
00:05:21TAXES FOR SOME HOMEOWNERS.
GOVERNOR KASICH AND REPUBLICAN
00:05:25LEADERS HAVE BEEN SAYING THE
EMPHASIS ON INCOME TAX CUTS WILL
00:05:29CREATE JOBS AND SPUR THE ECONOMY
AND THAT CUTTING INCOME TAXES
00:05:33WHILE RAISING SALES AND
CONSUMPTION TAXES IS A GOOD WAY
00:05:36TO GROW THE ECONOMY.
BUT DEMOCRATS HAVE SAID THAT THE
00:05:40TAX CUTS CLEARLY BENEFIT THE
WEALTHY WHILE THE INCREASE IN
00:05:42THE SALES TAX HURTS THE POOR,
AND THAT THE TAX CUTS DON'T PAY
00:05:47FOR EVEN ONE JOB.
HERE TO SHARE THEIR THOUGHTS ON
00:05:50THE STATE BUDGET ARE TWO EXPERTS
IN OHIO'S ECONOMY WITH VERY
00:05:53DIFFERENT VIEWS ON HOW TO
IMPROVE IT.
00:05:56WENDY PATTON WORKS ON BUDGET AND
TAX ISSUES AT POLICY MATTERS
00:05:59OHIO, A PROGRESSIVE LEANING
THINK TANK.
00:06:02DR. RICHARD VEDDER IS A
DISTINGUISHED PROFESSOR OF
00:06:05ECONOMICS EMERITUS AT OHIO
UNIVERSITY IN ATHENS AND HAS
00:06:08WRITTEN SEVERAL BOOKS AND
COLUMNS FROM A CONSERVATIVE
00:06:10VIEWPOINT.
HE HE JOINS US THROUGH WOUB IN
00:06:13ATHENS.
I WANT TO START WITH A QUESTION
00:06:15TO BOTH OF YOU HERE THAT I ASKED
SEVERAL GUESTS WHO HAVE BEEN ON
00:06:18THE SHOW TO TALK ABOUT THE
BUDGET IN THE LAST COUPLE WEEKS,
00:06:21HOW DO THE TAX CUTS IN THIS
BUDGET CREATE JOBS?
00:06:23LET ME START WITH YOU, WENDY.
>> TAX CUTS ARE USED AT THE
00:06:27FEDERAL LEVELS TO STIMULATE THE
ECONOMY BECAUSE THE NATIONAL
00:06:32GOVERNMENT CAN RUN A DEFICIT,
AND THEY CAN BRING MORE MONEY IN
00:06:35BY BORROWING.
IT'S LESS EFFECTIVE AT THE STATE
00:06:38LEVEL BECAUSE THE STATE ECONOMY
IS A CLOSED SYSTEM.
00:06:42THE TAX CUT, IF YOU TAKE A
DOLLAR FROM THE PUBLIC SECTOR
00:06:45AND GIVE IT TO THE PRIVATE
SECTOR, YOU HAVE TO TAKE A
00:06:48DOLLAR FROM THE PRIVATE SECTOR
BECAUSE STATES HAVE TO BALANCE
00:06:51THEIR BUDGETS.
NO NEW MONEY IS PUMPED INTO THE
00:06:54ECONOMY.
SO THE QUESTION IS, IS A DOLLAR
00:06:56IN THE PUBLIC SECTOR -- PRIVATE
SECTOR SPENT BETTER AND HAVE A
00:07:01MORE EFFECTIVE OUTCOME ON THE
ECONOMY?
00:07:04ESSENTIALLY WHAT MATTERS IS THE
SECTOR TO WHICH YOU'RE SPEAKING.
00:07:09GENERALLY SPEAKING, THE PUBLIC
SECTOR IS LABOR INTENSIVE, AND
00:07:13THE DOLLARS SPENT THERE PAYS THE
LIBRARIAN WHO GOES OUT AND
00:07:17SPENDS HIS MONEY ON MAIN STREET
IN STORES AND GROCERIES AND THAT
00:07:20HAS A STIMULATIVE EFFECT ON THE
ECONOMY.
00:07:23IT'S NOT NECESSARILY TRUE THAT
THE PRIVATE SECTOR WILL SPEND
00:07:27THAT MONEY IN A MORE STIMULATIVE
FASHION.
00:07:30>> YOU DON'T BELIEVE THAT TAX
CUTS WILL CREATE JOBS?
00:07:32>> THAT CERTAINLY HAS NOT BEEN
THE EFFECT HERE IN OHIO OVER THE
00:07:36LAST 10 YEARS THAT WE HAVE
WATCHED TAX CUTS.
00:07:38NOR IS IT THE EFFECT IN OTHER
PARTS OF THE COUNTRY THAT HAVE
00:07:42STUDIED THIS AND TRIED IT AS
WELL.
00:07:43>> DR. RICHARD VEDDER, LET ME
TURN TO YOU.
00:07:45HOW DO THE TAX CUTS IN THIS
BUDGET CREATE JOBS?
00:07:48>> I THINK I WOULD FUNDAMENTALLY
DISAGREE WITH WENDY.
00:07:53IN FACT WENDY SUGGESTED THE SUN
WAS GOING TO RISE IN THE EAST
00:07:56TOMORROW, I MIGHT RETHINK MY
POSITION ON THAT TOPIC.
00:08:03THE TAX CUTS HAVE MORE THAN ZERO
SUM EFFECT.
00:08:08WENDY IMPLIES THAT, WELL, IF WE
CUT TAX THAT IS WILL TAKE MONEY
00:08:14OUT OF THE PUBLIC SECTOR AND
GIVE IT TO THE PRIVATE SECTOR,
00:08:19AND THAT THE TOTAL PIE OR TOTAL
PRODUCTION OF GOODS AND SERVICES
00:08:23WILL REMAIN UNCHANGED.
THE TAX CUTS THAT WERE PROPOSED
00:08:29AND HAVE BEEN ENACTED INTO LAW
HAVE SUPPLY SIDE EFFECTS.
00:08:33THEY CHANGE INCENTIVES FOR
PEOPLE TO WORK AND INVEST.
00:08:36AND I THINK THEY CHANGE THEM IN
A VERY POSITIVE WAY.
00:08:39SO I THINK THAT THE REDUCTION,
FOR EXAMPLE, IN THE INCOME TAX,
00:08:44WHICH IS THE LARGEST SINGLE
COMPONENT OF THE BUDGET PLAN, IS
00:08:50-- HAS -- IS GOING TO HAVE A
VERY POSITIVE EFFECT ON JOB
00:08:55CREATION AND ECONOMIC GROWTH.
THERE IS A WEALTH OF LITERATURE,
00:09:00DOZENS UPON DOZENS OF STUDIES,
LOOK AT THE RELATIONSHIP BETWEEN
00:09:05STATE AND LOCAL INCOME TAX AND
THE RATES ON INCOME TAXES, AND
00:09:12THE RATE OF ECONOMIC GROWTH.
MOST OF THEM, ALMOST ALL OF
00:09:15THEM, SHOW A VERY SIGNIFICANT
RELATIONSHIP.
00:09:19SO I THINK THAT THIS TAX
REDUCTION WILL SERVE TO INCREASE
00:09:26INCOMES FOR OHIOANS BUT NOT JUST
ON THE DEMAND SIDE, IT WILL
00:09:30CREATE NEW JOBS ON THE SUPPLY
SIDE, WHICH WILL STIMULATE THE
00:09:33TOTAL OUTPUT OF THE STATE.
AND I COULD GO ON AND ON WITH
00:09:38ADDITIONAL COMMENTS ABOUT
WHETHER WORKERS ARE MORE LABOR
00:09:41INTENSIVE IN THE PUBLIC SECTOR
OR THE PRIVATE SECTOR, BUT TO ME
00:09:45THAT IS ALMOST BESIDE THE POINT.
>> I WANT TO ASK YOU, DR.
00:09:49VEDDER, WHAT KINDS OF JOBS ARE
WE TALKING ABOUT?
00:09:51ARE WE TALKING ABOUT JOBS THAT
HAVE WHAT A LOT OF PEOPLE REFER
00:09:54TO AS A LIVING WAGE?
ARE WE TALKING ABOUT PART-TIME
00:09:57JOBS?
WHAT KIND OF JOBS DO YOU FEEL
00:09:58WOULD BE CREATED WITH THE TAX
CUTS IN THIS BUDGET?
00:10:00>> I THINK THE EFFECTS WILL BE
RATHER BROAD BASED.
00:10:05WHEN YOU CUT TAXES, THE -- FIRST
OF ALL -- THE FIRST THING I WANT
00:10:09TO SAY ON THIS IS I DON'T THINK
THE EFFECTS COME OVERNIGHT.
00:10:12YOU DO GET SOME SPENDING EFFECTS
FAIRLY QUICKLY.
00:10:15BUT WHEN YOU REDUCE SAY THE TOP
INCOME TAX RATE FROM A LITTLE
00:10:19OVER 5.9% DOWN TO MORE LIKE
5.3%, YOU'RE NOT GOING TO HAVE
00:10:26EARTH SHAKING CHANGES IN THE
SHORT RUN.
00:10:29INCIDENTALLY I DON'T THINK THE
GOVERNMENT TAX POLICY IS GOING
00:10:33TO MONUMENTALLY CHANGE THE
ECONOMY ONE WAY OR THE OTHER
00:10:35EVEN IN THE LONG RUN.
BUT I DO THINK IT WILL HAVE A
00:10:39STIMULATIVE EFFECT.
BUSINESSES SEE, OHIO HAS A LOWER
00:10:43TAX BURDEN.
WE CAN MAYBE ATTRACT HIGH COST
00:10:47ENGINEERS AND HIGH COST
BUSINESSPERSONS WHO MAKE
00:10:51$150,000, $200,000 A YEAR TO
COME IN HERE AND WORK AT
00:10:56HIGH-TECH JOBS WHO PREVIOUSLY
WERE TURNED AWAY BECAUSE OF THE
00:10:59HIGH TAX BURDEN.
WE CAN -- LOWER INCOME PEOPLE
00:11:04LIKEWISE IN THE SMALL BUSINESS
TAX CUTS, MOST OF THEM, MOST
00:11:07PEOPLE, WON'T BE AFFECTED MUCH
AT ALL TO BE SURE, BUT AT THE
00:11:11MARGIN, SOME WILL.
THOSE EXTRA FEW DOLLARS THAT YOU
00:11:15GIVE THEM IN EXTRA INCOME RAISES
THE RATE OF RETURN ON THEIR
00:11:19INVESTMENT JUST ENOUGH TO LEAD
THEM TO DO ADDITIONAL HIRING,
00:11:22SOME ADDITIONAL EMPLOYMENT.
SO I THINK THE NET EFFECT WILL
00:11:25BE POSITIVE.
HOW POSITIVE, TIME WILL ONLY
00:11:27TELL.
>> WENDY, LET ME ASK YOU TO
00:11:30WEIGH IN ON THIS.
WHAT ABOUT THIS IDEA WE HAVE TO
00:11:32LOOK AT IT IN THE LONG TERM,
THIS IS A GROWING PROCESS AND
00:11:35THAT -- WHAT SORT OF THINGS DR.
VEDDER SAID?
00:11:38>> I THINK RICHARD AND I ARE
READING DIFFERENT ECONOMIC
00:11:41LITERATURE.
THE MORE RECENT ECONOMIC
00:11:44LITERATURE DOES NOT
OVERWHELMINGLY SUPPORT THE
00:11:47NOTION THAT TAX CUTS LEAD TO JOB
GROWTH.
00:11:50HOWEVER I WILL AGREE WITH HIM ON
THE POINT THAT JOB GROWTH TAKES
00:11:56PLACE OVER TIME.
SOME OF THE STUDIES OF TAX CUTS
00:12:02IN THE OREGON TAX INCIDENTS
MODEL, THE CALIFORNIA DYNAMIC
00:12:06REVENUE MODEL, INDICATE THAT A
VERY LARGE INVESTMENT IN TAX
00:12:10CUTS WILL HAVE A VERY SMALL AND
ANEMIC EFFECT AND OVER 10 YEAR'S
00:12:16TIME, AS A MATTER OF FACT IN
CALIFORNIA IT WAS DETERMINED
00:12:19THAT MORE THAN HALF OF THE
IMPACT WOULD HAPPEN AFTER 10
00:12:23YEARS, SO IT'S A STRATEGY THAT'S
VERY EXPENSIVE.
00:12:26IT TAKES A VERY LONG TIME, AND
THE RESULTS ARE RELATIVELY WEAK.
00:12:30>> WHAT ABOUT THE IDEA THAT
OHIO, HAVING A LOWER TAX BURDEN,
00:12:34WILL LURE IN MORE COMPANIES
AROUND THE STATE, MORE HIGHER
00:12:38PAID INDIVIDUALS, MORE HIGHER
WEALTH INDIVIDUALS, MORE JOB
00:12:40CREATORS AS THEY ARE COMMONLY
REFERRED TO?
00:12:42>> FOOT LOOSE INDUSTRIES
PASS-THROUGH AND THE STATES PLAY
00:12:46OFF AGAINST EACH OTHER IN THE
WAR, SOME INDUSTRIES WILL LOCATE
00:12:52FOR LOW COST IN ONE STATE, AND
WHEN THE INCENTIVES RUN OUT THEY
00:12:57MOVE TO ANOTHER STATE.
WE NEED TO LOOK AT LONG-TERM
00:12:59GROWTH INSTEAD OF THIS
SHORT-TERM REALLY LARGELY
00:13:02POLITICAL GAME THAT PEOPLE PLAY.
IF YOU LOOK AT OHIO'S INCOME TAX
00:13:07RATES, THEY ARE HIGHLY
COMPETITIVE FOR MOST OF US.
00:13:09MOST OF US MAKE LESS THAN
$100,000 A YEAR.
00:13:12THE 3.2% TOP INCOME RATE WE FACE
IS HIGHLY COMPETITIVE.
00:13:17IT'S LOWER THAN INDIANA'S.
I THINK THAT SOME OF OUR
00:13:23LEGISLATORS, MAYBE OUR GOVERNOR
WILL START A NEW MARKETING
00:13:27STRATEGY AND POINT OUT HOW
HIGHLY COMPETITIVE OHIO'S INCOME
00:13:30TAX RATE IS FOR THE VAST
MAJORITY OF WORKERS THEY'LL
00:13:33EMPLOY.
>> WOULD THE IDEA OF CONSUMPTION
00:13:35TAXES GOING UP, THOUGH, IT SEEMS
LIKE THERE IS A POSSIBILITY THAT
00:13:38MORE INCOME TAX CUTTING COULD BE
GOING ON.
00:13:41THE GOVERNOR HAS PROPOSED A
BODDENING OF THE STATE SALES
00:13:45TAX.
IT WOULD HAVE BEEN LOWER, BUT
00:13:48BROADER, THAT WAS SOMETHING I
KNOW YOU HAD CONCERNS ABOUT AS
00:13:50WELL.
WHAT ABOUT THIS IDEA OF
00:13:52INCREASING TAXES ON CONSUMPTION
WHILE YOU'RE CUTTING INCOME
00:13:56TAXS?
LET ME ASK YOU, DR. VEDDER.
00:13:58>> I THINK CONSUMPTION TAXES BY
AND LARGE ARE MORE BENIGN IN
00:14:02THEIR ECONOMIC EFFECT.
THAT IS THEY HAVE LESS ADVERSE
00:14:06EFFECTS, DOLLAR FOR DOLLAR, THAN
TAX CUTS OR TAX CHANGES WITH
00:14:12RESPECT TO INCOME.
I THINK THERE'S A LOT OF
00:14:15EVIDENCE THAT SUPPORTS THAT, AND
IF YOU READ THE -- IT WAS THE
00:14:21JUNE, 2013 ISSUE OF THE AMERICAN
ECONOMIC REVIEW, THE MOST
00:14:26PRESTIGIOUS PUBLICATION IN
ECONOMICS, I THINK THERE ARE TWO
00:14:29PAPERS IN THERE THAT ARE
GENERALLY SUPPORTIVE OF THIS
00:14:33NOTION OF TAXATION ON INCOME
TENDS TO HAVE DETRIMENTAL
00:14:38EFFECTS.
THESE ARE THE TAXATION ON
00:14:40CONSUMPTION.
I WOULD POINT OUT THAT IN THE
00:14:43LAST SEVERAL YEARS OHIO HAS GONE
FROM HAVING A VERY HIGH -- SAY
00:14:50UNEMPLOYMENT RATE, LET'S TALK
ABOUT JOBS, UNEMPLOYMENT RATE
00:14:53RELATIVE TO THE NATIONAL AVERAGE
TO ONE NOW WHERE UNEMPLOYMENT IN
00:14:58OHIO IS BELOW THE NATIONAL
AVERAGE WHERE WE HAVE HAD INCOME
00:15:04GROWTH IN THE LAST FEW YEARS IN
THE STATE THAT HAS BEEN DOUBLE
00:15:09THE NATIONAL AVERAGE, AND I
THINK PART OF THIS HAS RESULT
00:15:13INTERESTED SOME PREVIOUS TAX
CUTS THAT STARTED -- BY THE WAY
00:15:16UNDER BOTH REPUBLICAN AND
DEMOCRATIC ADMINISTRATIONS, THE
00:15:20STRICKLAND ADMINISTRATION IN
CARRYING OVER TO THE BEGINNING
00:15:24OVER TO THE PRESENT WHERE THE
TOP TAX RATE ON INCOME HAS COME
00:15:27DOWN AND IS NOW CONTINUING TO
FALL.
00:15:32WHEN WE TALK ABOUT TAXES,
REMEMBER ONE THING, OHIO HAS AN
00:15:37STREEREDLY -- EXTRAORDINARILY
HIGH INCIDENT OF LOCAL TAXES.
00:15:41WE ARE THE ONLY STATE IN THE
UNION TO MY KNOWLEDGE THAT HAS
00:15:44SCHOOL DISTRICT INCOME TAXES,
FOR EXAMPLE.
00:15:46SO YOU GOT TO LOOK AT THE WHOLE
PICTURE, STATE, LOCAL, SCHOOL
00:15:50DISTRICTS.
WHEN YOU ADD THEM UP, OHIO IS
00:15:52NOT A PARTICULARLY LOW TAX STATE
WITH RESPECT TO INCOME.
00:15:56>> I WANT TO GET BACK TO THAT IN
JUST A MOMENT.
00:15:59WENDY, I WANT TO HAVE YOU WEIGH
IN ON THIS IDEA OF INCREASING
00:16:02CONSUMPTION TAXES.
DR. VEDDER SAID THEY ARE THE
00:16:04MOST BENIGN AND THAT THE INCOME
TAX CUTS CAN CREATE MORE JOB
00:16:08GROWTH AND ECONOMIC GROWTH.
LET ME ASK YOU TO WEIGH IN ON
00:16:12THAT.
>> WE SUPPORTED THE BROADENING
00:16:14OF THE SALES TAX BASE BECAUSE WE
FEEL IT STABILIZES THE ECONOMY
00:16:18AND IT MAKES IT -- MIRROR THE
ACTUAL ECONOMY BETTER.
00:16:22THAT SAID, A PROGRESSIVE INCOME
TAX MAKES THE TAX SYSTEM MORE
00:16:27FAIR.
OHIO HAS A PROGRESSIVE INCOME
00:16:30TAX SYSTEM, AND OUR OVERALL
STATE AND LOCAL TAX BURDEN IS
00:16:35SLIGHTLY MORE PROGRESSIVE, IT'S
SLIGHTLY LESS BAD THAN OTHER
00:16:39STATES, BUT IT'S STILL BAD.
IN OHIO THE TOP 1% PAYS A FULL
00:16:45THIRD LESS IN TERMS OF A SHARE
OF INCOME THAN THE VERY POOREST
00:16:48PEOPLE IN THE STATE.
THAT'S AN ISSUE OF EQUITY.
00:16:54IT'S NOT FAIR AND THAT MATTERS
TO THE FAMILY WHO IS PAYING IT.
00:16:58IN TERMS OF THE SALES TAX, THE
VALUE OF THE SALES TAX AND TAX
00:17:03STRUCTURE, IT'S VERY IMPORTANT
WITHIN THE TAX STRUCTURE.
00:17:05IT'S ONE OF OUR TWO BIGGEST
TAXES.
00:17:08WE HAVE THE SALES TAX AND
PERSONAL INCOME TAX.
00:17:10IT WEIGHS MORE HEAVILY ON -- IF
YOU GO DOWN THE INCOME SCALE AND
00:17:15BALANCING THAT OUT WITH THE
PROGRESSIVE INCOME TAX IS VERY
00:17:18IMPORTANT TO FAMILIES.
>> I WANT TO ASK YOU, DR. VEDDER
00:17:21B. THIS IDEA THIS WORD BENIGN
YOU USED AND ALSO THE IDEA OF
00:17:24THE LOCAL TAXES, THESE MANY,
MANY LOCAL TAXES THAT A LOT OF
00:17:27FOLKS SEE IN THEIR OWN
COMMUNITIES, DOESN'T ALL THIS
00:17:30KIND OF END UP SQUEEZING PEOPLE
AT THE LOCAL LEVEL?
00:17:33YOU CUT TAXES AT THE STATE
LEVEL, BUT THEN YOU ALSO CUT THE
00:17:36MONEY THAT GOES TO LOCAL
GOVERNMENTS, AND SCHOOLS THEY
00:17:39HAVE TO PUT MORE LEVEES ON THE
BALLOT.
00:17:44DOESN'T THIS HAVE A TRICKLE DOWN
EFFECT IN A NEGATIVE WAY ON
00:17:47PEOPLE IN THEIR LOCAL
COMMUNITIES?
00:17:48>> IT IS TRUE WHEN YOU CUT STATE
TAXES YOU REDUCE THE STATE'S
00:17:52ABILITY TO FUND LOCAL
GOVERNMENTS.
00:17:54ALTHOUGH I WOULD ADD, AND I'M
NOT REALLY THE EXPERT ON THE
00:17:58SPENDING SIDE OF THIS BUDGET,
BUT IT'S MY UNDERSTANDING THAT
00:18:01THERE WERE SOME FAIRLY
SUBSTANTIAL INCREASES ON THE
00:18:05SPENDING SIDE WITH RESPECT TO
LOOT OF LOCAL SERVICES -- LOT OF
00:18:10LOCAL SERVICES INCLUDING SCHOOL
DISTRICTS.
00:18:12SO IT IS TRUE THERE ARE
TRADEOFFS IN LIFE.
00:18:15AND WENDY IS QUITE CORRECT IN
SUGGESTING THAT WHEN YOU
00:18:18EVALUATE A TAX, YOU HAVE TO LOOK
NOT ONLY AT WHETHER IT CREATES
00:18:22JOBS AND WHETHER IT CREATES
INCOME, BUT YOU ALSO HAVE TO
00:18:26LOOK AT FAIRNESS.
BUT FAIRNESS IS SOMEWHAT OF A
00:18:30SUBJECTIVE CONCEPT.
WHAT IS FAIR TO MAYBE TO WENDY,
00:18:34MAYBE UNFAIR TO ME AND VICE
VERSA.
00:18:37THIS IS SOMETHING THAT'S VERY
DIFFICULT TO MEASURE.
00:18:40OHIO'S TAX SYSTEM ON THE WHOLE
IS, AS WENDY INDICATED, MODESTLY
00:18:46MORE PROGRESSIVE THAN THE
TYPICAL STATE.
00:18:48AND IF WE TRY TO DEVIATE FROM
THE TYPICAL STATE MUCH IN TERMS
00:18:53OF PROGRESSIVEIVE, I THINK WE'LL
PAY A HIGH PRICE BECAUSE THERE
00:18:57IS TAX COMPETITION BETWEEN THE
STATES.
00:18:59AND THAT IS A FACTOR IN
EXPLAINING THE MOVEMENT OF
00:19:03PEOPLE AND GOODS AND SERVICES
AND INVESTMENT SPENDING AND
00:19:08IDEAS FROM ONE JURISDICTION TO
ANOTHER.
00:19:11>> WENDY'S GROUP HAS DONE A
STUDY ABOUT THE INCOME, THE
00:19:14EFFECT OF THE INCOME TAXES AND
THE EFFECT OF THE SALES TAX
00:19:17INCREASE BASICALLY SAYING THAT
PEOPLE IN THE TOP PART OF THE
00:19:21BRACKETS WOULD END UP GETTING A
LARGE INCOME TAX CUT.
00:19:26WHERE PEOPLE ON THE BOTTOM /5
[-- 2/5 BRACKETS WOULD PAY MORE
00:19:33MONEY THROUGH THE SALES TAX
INCREASE.
00:19:35I'M WONDERING, YOU SAID THE
SALES TAX INCREASES ARE BENIGN,
00:19:39MOST BENIGN, AND YET IT SEEMS
LIKE PEOPLE AT THE BOTTOM LEVELS
00:19:43ARE GOING TO BE PAYING MORE IN
THIS BUDGET RATHER THAN PEOPLE
00:19:45AT THE TOP LEVELS WHEN YOU
COMPARE THAT.
00:19:47AND THAT'S NOT EVEN CONSIDERING
WHEN YOU START ADDING IN
00:19:51POSSIBLE NEW LEVIES AT THE LOCAL
LEVEL.
00:19:53>> THERE ARE OTHER ASPECT OF THE
BUDGET WE HAVEN'T TALKED ABOUT.
00:19:56EARNED INCOME TAX CREDITS THAT
BENEFIT THE LOW INCOME
00:20:00POPULATION, FOR EXAMPLE.
THAT IS ESSENTIALLY A TAX
00:20:05RELATED KIND OF MATTER.
WHEN YOU ADD ALL OF THESE THINGS
00:20:08UP, I'M NOT SURE THAT THAT
POSITION IS TRUE.
00:20:12I SUSPECT IT RELATIVELY FEW
LOW-INCOME PEOPLE WILLND UP
00:20:17PAYING MORE MONEY, A QUARTER
PERCENT ON SALES IS NOT AN EARTH
00:20:23SHAKING AMOUNT OF MONEY FOR A
FAMILY THAT, WITH A $20,000
00:20:27INCOME THAT PAYS $10,000 OUT TO
BUY GOODS THAT ARE SUBJECT TO
00:20:32SALES TAX, AND REMEMBER MOST
FOOD AND MOST -- AND HOUSING IS
00:20:36NOT SUBJECT TO IT.
SO IF YOU HAD $10,000 YOU BOUGHT
00:20:42OF GOODS SUBJECT TO THE TAX, YOU
ARE TALKING ABOUT $25 A YEAR.
00:20:46NOW, I ADMIT $25 A YEAR IS NOT
ZERO, AND IT'S NOT TRIVIAL.
00:20:52BUT IT ISN'T LIKE WE ARE TALKING
ABOUT A MEASURABLE, DRAMATIC
00:20:56CHANGE IN THE BURDEN OF
TAXATION.
00:21:00OHIO HAS A MORE EQUALLY
DISTRIBUTED INCOME AMONG ITS
00:21:04POPULATION THAN THE AVERAGE
STATE IN THE UNION.
00:21:07WE, FOR EXAMPLE, IN THE STATE
ONLY HAVE THREE MEMBERS OF THE
00:21:13FORTUNE 400 LIST IN OUR STATE.
MICHIGAN HAS NINE.
00:21:15ILLINOIS HAS 13.
PENNSYLVANIA HAS FOUR.
00:21:19INDIANA HAS FOUR.
WE ARE NOT A STATE MADE UP OF
00:21:22HUGE PLUTO CONTRACTS WHO ARE
GETTING PRINCE GEORGE'S BECAUSE
00:21:26OF SPECIAL STATE TAX FAVORS.
WE ARE A STATE THAT, I THINK,
00:21:30HAS SHOWN SENSITIVITY TO PEOPLE
AT LOW INCOME GROUPS.
00:21:35AND WE HAVE A MORE PROGRESSIVE
INCOME TAX BY FAR THAN INDIANA
00:21:39WHICH HAS A FLAT RATE TAX OR
MICHIGAN THAT HAS A FLAT RATE
00:21:43TAX, OR PENNSYLVANIA OR ILLINOIS
OR MASSACHUSETTS.
00:21:45ALL OF WHOM HAVE FLAT RATE
TAXES.
00:21:49I THINK THAT THE EMPHASIS ON
EQUITY ISSUES, WHILE
00:21:56UNDERSTANDABLE AND LEGITIMATE
ISSUE, I THINK HAS BEEN
00:22:02OVERBLOWN IN THIS DISCUSSION.
>> YOU WANT TO ASK YOU ABOUT
00:22:04THAT STUDY YOU DID THAT YOU
SHOWED, I THINK IT WAS THE
00:22:07LOWEST 20% HAD ABOUT -- THEY
WOULD PAY $12 MORE UNDER THIS,
00:22:11WHEREAS THE TOP 5% OR 10% WOULD
GET BACK SIGNIFICANTLY MORE, I
00:22:17WANT TO SAY AROUND $1,000.
DR. VEDDER SAYING THIS ISN'T
00:22:23MEASURABLE.
THIS IS NOT THAT BIG A DEAL IN A
00:22:26SENSE BECAUSE IT REALLY IS A
SMALL AMOUNT OF MONEY.
00:22:29>> THIS TAX PLAN IS ANOTHER MOVE
BY OHIO TO FOLLOW A PATTERN OF
00:22:35TAX CUTTING THAT WE FOLLOWED FOR
THE LAST -- OVER THE LAST DECADE
00:22:40.
IN THIS TAX CUT THE TOP 1%
00:22:43EARNING OVER $335,000 A YEAR,
GET $6,000 A YEAR BACK, WHEREAS
00:22:47THOSE AT THE VERY BOTTOM PAY
ABOUT $12 MORE.
00:22:50THOSE ARE IN THE MIDDLE IT'S A
NET OUTCOME, YOU GET ABOUT $9 A
00:22:54YEAR.
THIS IS A VERY LARGE EXPENDITURE
00:22:58FOR THE WEALTHY.
AND THE PRIMARY IMPACT IS THAT
00:23:01IT SIPHONS REVENUE FOR NEEDED
SERVICES.
00:23:05SINCE OHIO STARTED DOWN THE TAX
CUTTING ROAD IN 2005, WE HAVE
00:23:11NOT -- OUR ECONOMIC PERFORMANCE
HAS LAGGED THAT OF THE COUNTRY.
00:23:16OVER THE LAST 10 YEARS WE ARE
THE WORST IN JOB CREATION.
00:23:20THE NATION PRODUCED 1.2% HIGHER
JOB GROWTH.
00:23:26OHIO'S JOBS SHRANK BY 4%.
THE TAX CUTTING STRATEGY, THE
00:23:31SIPHONING OF REVENUES WHICH GO
DISPROPORTIONATELY TO TOP
00:23:36EARNEST HAS NOT PROVEN TO BE A
SUCCESSFUL STRATEGY FOR OHIO IN
00:23:40TERMS OF BUILDING
COMPETITIVENESS.
00:23:41IN THE WAKE OF THE LAST BUDGET
CUTS, LOCAL GOVERNMENTS DIMMED
00:23:46STREETLIGHTS, CLOSED POOLS,
SHUTTERED SENIOR CENTERS, AND IN
00:23:49CLEVELAND THEY LEFT ROADKILL TO
FESTER ON THE ROADS FOR A COUPLE
00:23:52EXTRA DAYS.
THAT'S NOT BUILDING
00:23:54COMPETITIVENESS IN THE
COMMUNITY.
00:23:57>> DR. VEDDER, THE LAST WORD
HERE REAL QUICK.
00:23:59>> I THINK THE STATISTICS THAT
WENDY ARE CITING ARE QUITE
00:24:05MISLEADING.
FOR EXAMPLE, THE LAST -- FROM
00:24:092010 TO 2012, U.S. GROWTH IN PER
CAPITA INCOME, 1.9 REAL TERMS.
00:24:16OHIO, 3.8.
FALL IN UNEMPLOYMENT RATE, JUNE,
00:24:222010, JUNE, 2013, 2.8% IN OHIO.
1.9, U.S.
00:24:28WE HAVE GONE FROM ABOVE TO BELOW
THE AVERAGE.
00:24:30SO I THINK THE EVIDENCE IS --
DEPENDS ON THE YEARS YOU PICK.
00:24:35I THINK THE RECENT EVIDENCE IS
HE VERY SUPPORT PRIVILEGE --
00:24:38SUPPORTIVE THAT THE STATE HAS
BENEFIT INTERESTED THESE
00:24:41POLICIES.
A FINAL REBUTTAL?
00:24:43>> SINCE 2005 WHEN WE STARTED
OUR TAX CUTTING STRATEGIES WITH
00:24:46THE BIG TAX OVERHAUL IN WHICH
EELIMINATING THE TANGIBLE
00:24:51PERSONAL PROPERTY TAX, CUT
PERSONAL PROPERTY TAXES BY 21%,
00:24:56AND WE HAVE DONE IT AGAIN THIS
YEAR, IN THAT PERIOD OF TIME,
00:24:59THE LAST EIGHT YEARS, WE HAVE
SEEN JOB GROWTH IN THE COUNTRY
00:25:04CONSISTENTLY LAG THAT OF THE
NATION.
00:25:05OVER 10 YEARS WE HAVE THE FIRST
-- FOURTH WORST PERFORMANCE OF
00:25:09ANY STATE IN THE NATION.
IT'S A LONG-TERM STRATEGY, LORGE
00:25:13OUTCOMES HAVEN'T WORKED FOR
OHIO.
00:25:15WE NEED A NEW STRATEGY FOR
BUILDING COMPETITIVENESS.
00:25:17>> WENDY PATTON AND DR. RICHARD
VEDDER, THANK YOU FOR BEING
00:25:20HERE.
THAT'S IT FOR THIS WEEK.
00:25:22FOR MY COLLEAGUES AT OHIO PUBLIC
RADIO AND TELL VILLINGS, THANKS
00:25:24FOR WATCHING.
IF YOU'D LIKE TO ASK QUESTIONS,
00:25:26MAKE COMMENTS, OR WATCH THIS
WEEK'S SHOW OR EARLIER EPISODES,
00:25:30PLEASE VISIT OUR WEBSITE AT
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00:25:32YOU CAN ALSO CHECK US OUT ON
FACEBOOK, AND YOU CAN FOLLOW
00:25:36ANDY CHOW, JO INGLES, AND ME ON
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00:25:39AND PLEASE JOIN US AGAIN NEXT
Note : Transcripts are compiled from uncorrected captions