Apparently neither Jon Keeling nor Matt Naugle have ever heard of the Law of Unintended Consequences- How Kasich’s tax plan would make Ohio’s economy worse

Both out-of-state Kasich blogger Jon Keeling and Matt Naugle are trying to make political hay out of a recent Plain Dealer story that Ohio-based American Greetings is thinking of relocating out of Brooklyn, Ohio due to high local taxes.

They’re both writing that it’s somehow the State government’s fault, but that’s not what the story says:

In an internal memo sent to employees on Wednesday, the company said: “we are launching a study to consider whether or not we should move the company’s world headquarters to another location” because the City of Brooklyn last spring voted to raise the city’s payroll tax 25 percent, to 2.5 percent from 2.0 percent.

In other words, it has nothing to do with Ohio’s taxes.

Keeling doesn’t even bring himself to claim that Kasich’s plan would do any better.? Seriously, read the post.? He doesn’t even say, “this is why Ohio needs John Kasich.”? Can’t even bring himself to write it.

Why?? Because even Keeling knows that Kasich’s plan would make this situation even worse.

The state’s income and estate taxes provide a broad tax base that can provide financial support for local governments at a tax rate lower than what those individual local governments can generate from their smaller tax base.

Repeal Ohio’s income and estate taxes, and local governments will stop getting that financial assistance from the broader tax base and will have to massive cut spending (when the economy has already forced cities to do so under the current tax structure) AND raise taxes.

Do what Kasich prescribes and local income tax and property tax rates will skyrocket.? They’ll HAVE to.? That’s why conservatives have failed in efforts to repeal the estate tax in the past.? The Law of Unintended Consequences demands that such a move would raise tax rates elsewhere.? And because those taxes have a narrower base, the rate that those taxes would need to increase to generate the same income is higher than the rate businesses and their employees are paying now under a broader base tax structure.

Say what you will, but John Kasich’s prescription would actually make the situation worse for companies like American Greetings, not better.