Ohio Needs More Business Failures???

Right Runner: Ohio Needs More Business Failures???

Via the Right Runner:

Well, yeah. And, this article by The Buckeye Institute explains why. Think of the business cycle as one big funnel that's big at the top and small at the bottom. All the start-up businesses go in at the top. Through attrition; not enough money, poor business model, unforeseen consequences, etc; the majority of businesses will fail. But, through the bottom end emerges some very strong companies. Here's a few snippets of the article:

Business failure is an essential part of the churn of a vibrant economy. They can’t be prevented, and policymakers shouldn’t try. Research shows that an economy’s business failure rate has little to do with its success in generating jobs (and wealth).

In addition:

Indeed, a US Small Business Administration report found that the rate of small company “births” was crucial to state economic growth, employment, and income. What’s important is the number of firms that start, not the number that fail.

This is a critically important insight. On a statewide basis, Ohio’s economy doesn’t suffer because companies fail. It suffers because enough new ones don’t start. Entrepreneurs don’t see Ohio as a place to begin their quest for fortune.

Why not? Because:

Ohio’s business climate has ranked near the nation’s bottom for decades—46th out of 50 states according to the Washington, DC-based Tax Foundation. The income tax is our “category killer.” Ohio’s state and local income taxes bury us in 48th spot, just above California and New Jersey.

Why is that? Because:

Ohio’s income taxes punish small businesses owners for making more money. Then, in a double whammy, our estate tax encourages them to move it out of state. Simply reducing the number of tax brackets could add 55,000 jobs to the Ohio economy and increase payroll by $1.8 billion according to research by the Beacon Hill Institute at Suffolk University in Boston.

So, what's the answer? Glad you asked:

Ohio needs to streamline the business start up process and reduce the burdens on current and future wealth creators. An intermediate step might be to adopt one income tax rate for all Ohio households, and eliminating income tax obligations for low and moderate income households. A more radical and economically beneficial step would be to follow the lead of high growth states like Texas and eliminate the income tax altogether. This would help establish Ohio as the Hong Kong of the Midwest, demonstrating to investors everywhere that the state is serious about promoting and protecting wealth creation.

Anything else?

Ohio doesn’t just need one or two new businesses. It needs ground swell. Gov. Strickland and state policymakers should dump the failed policies of the past and consider adopting outside the box reforms like phasing out the state income tax over the long term.

So, essentially Ohio needs to cut taxes, reduce spending and create a more business-friendly environment. Where have you heard that before?

PS: I forgot to mention that there is a guy who has already stated his intention to run for governor in a couple of years. He has already stated that one of the things Ohio needs to do in order to turn its business climate around is to phase out the income tax. He plans to unveil how to make up for the loss in income in the near future. There is also a really nice benefit to no income taxes: more money in my wallet. I'm on board with that. His name is John Kasich.

Comment: The Right Runner is spot on concerning the recommendations offered by The Buckeye Institute, and it has been amazing that this superior think tank’s research has been disregarded by the ORP.

Gov. Strickland certainly is not the guy that will effect any positive change, however his ascendancy resulted from the miserable performance of our former governor Taft and the poor policy created by the Republican led General Assembly.

Folks, change will only come when we put people in positions of authority that have our norms. We must stop perpetuating the same failed actions. The definition of insanity is doing the same thing over and over and expecting different results. We keep voting for the big government cabal in the ORP election after election and look where Ohio is today. The time has come for a new generation of leaders, but this will not come until we purge the old guard. This purge must hit them in the wallets, so please, boycott the ORP and withhold all donations until change comes.

Right Runner’s commentary indicates that we have no choice. Well I guess we do have another, but its called insanity.