Of the issues on May’s primary ballot, the most distressing is Issue 1, the so-called Ohio Third Frontier. No matter how you look at it, it just doesn’t make financial sense.
The idea, so the folks who back it say, is to create an atmosphere for economic growth in Ohio, and heaven knows we need whatever economic growth we can generate. Growth is the word here, and government spending never, I repeat never, generates any economic growth. If anything, government spending creates economic depression. Combined with government regulation and direction of the economy, government spending always ends in economic disaster. Always.
Issue 1 will allow the State of Ohio to issue bonds in the amount of 700 million dollars to support the start of small businesses. Sounds like a great idea until you look at it.
Problem one is that the money is to be raised in the form of bonds. Selling of bonds produces money which must be paid back to the lender. Did you get the words “must be paid back”? With the state already a billion dollars in debt, high unemployment, tax revenues down, businesses leaving the state, and the federal government on the verge of going broke, why would anybody in government want to increase the debt by 70-percent?
Problem two is that people in government don’t understand economics and finance, and that applies from the municipal level all the way to the top. The idea that government has the ability to create income producing jobs is just a hiccup short of total idiocy. The government, without a doubt, can create jobs, but the jobs government creates are not economically productive. No government job ever created produced anything but expense. To pay the expense of government created jobs, government taxes the working public. Taxes decrease investment which ultimately decreases employment.
Problem three is that government has no idea how to pay back the principle and interest on the $700,000,000. Ohio’s economic problem is not only that of Ohio, but that of the United States as well. The debt incurred by the Ohio government is so already large, a billion dollars, that adding more borrowed money to it will make it impossible to pay those bonds off because of an eroding tax base. Help from the federal government will not be forthcoming as the United States government has a financial debt now which will only become worse and is driving the country into bankruptcy. If you think that can’t happen, take a look at Greece. Once a great nation, Greece is on the verge of bankruptcy, and frankly, their bankruptcy can destroy the world economy.
Problem four is the total lack of imagination and sense of reality on the part of government, in this case, the State of Ohio. Making of loans, grants, whatever you choose, will not better the State’s economy. Only increased business and increased employment, along with decreased government spending at all levels, will pull this economic crisis out of the fire. Ironically, to increase tax revenues at all government levels, government must lower business and personal taxes. Decreasing the cost of doing business by lower tax rates, will increase return on investment and in turn increase production. Increased production will create more jobs. More jobs will create more consumer purchasing power resulting in more sales. More sales create more profit for everybody.
So what do lower tax rates have to do with increased tax revenue? Say a business has a profit of $100,000 a year. With a 15-percent tax rate it pays $15,000 in taxes a year. If such a business, with a lower tax rate of 10-percent, increased sales by 50-percent, increasing profit to $150,000 a year, that business would still pay $15,000 in taxes, but the side effects would be staggering. Increased sales require increased production, which requires more raw materials, which would require increased employment, which would require…well, you get the idea, all of which raises the tax base and hence increases tax revenue. The end result is more money for investment in, and improvements to, the business.
What government doesn’t understand is that investment in business is based on profit. Business won’t go where there are high tax and labor costs. Don’t believe it? Look at current production in the United States, once the world’s greatest manufacturer, and compare it with countries such as China, India, Japan, Taiwan, and others. Business goes where the best return on invested money can be realized. And that certainly is not in Ohio.
Issue 1 on this May 4’s ballot will not help manufacturing and business. Realize that its passage will add seven hundred million dollars to the state debt for a project, Ohio Third Frontier, which as been in place since Taft was governor and has consistently failed to alleviate the business loss and unemployment which has plagued Ohio for years. A yes vote on Issue 1 will accomplish one thing, an increased deficit in the state budget.
Vote No on Issue 1.
The idea, so the folks who back it say, is to create an atmosphere for economic growth in Ohio, and heaven knows we need whatever economic growth we can generate. Growth is the word here, and government spending never, I repeat never, generates any economic growth. If anything, government spending creates economic depression. Combined with government regulation and direction of the economy, government spending always ends in economic disaster. Always.
Issue 1 will allow the State of Ohio to issue bonds in the amount of 700 million dollars to support the start of small businesses. Sounds like a great idea until you look at it.
Problem one is that the money is to be raised in the form of bonds. Selling of bonds produces money which must be paid back to the lender. Did you get the words “must be paid back”? With the state already a billion dollars in debt, high unemployment, tax revenues down, businesses leaving the state, and the federal government on the verge of going broke, why would anybody in government want to increase the debt by 70-percent?
Problem two is that people in government don’t understand economics and finance, and that applies from the municipal level all the way to the top. The idea that government has the ability to create income producing jobs is just a hiccup short of total idiocy. The government, without a doubt, can create jobs, but the jobs government creates are not economically productive. No government job ever created produced anything but expense. To pay the expense of government created jobs, government taxes the working public. Taxes decrease investment which ultimately decreases employment.
Problem three is that government has no idea how to pay back the principle and interest on the $700,000,000. Ohio’s economic problem is not only that of Ohio, but that of the United States as well. The debt incurred by the Ohio government is so already large, a billion dollars, that adding more borrowed money to it will make it impossible to pay those bonds off because of an eroding tax base. Help from the federal government will not be forthcoming as the United States government has a financial debt now which will only become worse and is driving the country into bankruptcy. If you think that can’t happen, take a look at Greece. Once a great nation, Greece is on the verge of bankruptcy, and frankly, their bankruptcy can destroy the world economy.
Problem four is the total lack of imagination and sense of reality on the part of government, in this case, the State of Ohio. Making of loans, grants, whatever you choose, will not better the State’s economy. Only increased business and increased employment, along with decreased government spending at all levels, will pull this economic crisis out of the fire. Ironically, to increase tax revenues at all government levels, government must lower business and personal taxes. Decreasing the cost of doing business by lower tax rates, will increase return on investment and in turn increase production. Increased production will create more jobs. More jobs will create more consumer purchasing power resulting in more sales. More sales create more profit for everybody.
So what do lower tax rates have to do with increased tax revenue? Say a business has a profit of $100,000 a year. With a 15-percent tax rate it pays $15,000 in taxes a year. If such a business, with a lower tax rate of 10-percent, increased sales by 50-percent, increasing profit to $150,000 a year, that business would still pay $15,000 in taxes, but the side effects would be staggering. Increased sales require increased production, which requires more raw materials, which would require increased employment, which would require…well, you get the idea, all of which raises the tax base and hence increases tax revenue. The end result is more money for investment in, and improvements to, the business.
What government doesn’t understand is that investment in business is based on profit. Business won’t go where there are high tax and labor costs. Don’t believe it? Look at current production in the United States, once the world’s greatest manufacturer, and compare it with countries such as China, India, Japan, Taiwan, and others. Business goes where the best return on invested money can be realized. And that certainly is not in Ohio.
Issue 1 on this May 4’s ballot will not help manufacturing and business. Realize that its passage will add seven hundred million dollars to the state debt for a project, Ohio Third Frontier, which as been in place since Taft was governor and has consistently failed to alleviate the business loss and unemployment which has plagued Ohio for years. A yes vote on Issue 1 will accomplish one thing, an increased deficit in the state budget.
Vote No on Issue 1.
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