October 2006 News from Policy Matters Ohio: Sun on Tuesday, snow on Friday?

- October 20, 2006

Ohio policy news is as variable as this week’s weather is predicted to be – sunny potential in energy, better economic policy, free tax preparation and a minimum wage boost; stormy progress on tax proposals and job growth.

Tax proposal falls flat – Forty-five percent of Ohioans would end up paying higher taxes while only 30 percent would see taxes lowered, based on an updated analysis of the details available on Ohio gubernatorial candidate Ken Blackwell’s plan for a flat 3.25 percent income tax. Meanwhile, the richest Ohioans would each eventually reap thousands of dollars on average in annual tax savings, and the state would lose more than $800 million a year in revenue. Thanks to the Institute on Taxation and Economic Policy, we were able to analyze the evolving proposal, as new details emerged. All iterations of the policy turned out to be flat-out misguided.

Growth for all – Ohio worker productivity, Ohio executive compensation and national corporate profits have all risen steeply in inflation-adjusted terms in the past few years, while the minimum wage has declined in real terms, the median wage has stagnated, and the average wage has grown at a snail’s pace. These are the findings of a new report by Policy Matters Ohio and the Center for American Progress (CAP). Room to Grow: Ohio Can Afford a Higher Minimum Wage finds that increased productivity and profits provide room for a minimum wage increase in Ohio. 

No poaching here – As Cleveland considered working with nearby suburbs to prevent destructive inter-city competition for jobs, Policy Liaison Wendy Patton decided to gather intelligence on how to help communities avoid poaching and counter-poaching among neighbors. Though they are uncommon, we found several, described in this September 2006 background memo.

Who Takes Credit? – More Cuyahoga County families received free tax preparation at volunteer income tax assistance sites in 2006 than in any previous year. The Cuyahoga EITC Coalition helped working families claim more than $4.2 million in federal credits and avoid exploitative tax preparation and early refund fees. We also surveyed these modest-income families and found – surprise! – they plan to spend much of the money in the community. See the report here. This and other good work inspired the National Community Tax Coalition (LINK) to appoint Policy Matters’ research assistant David Rothstein to its Steering Committee.

Clean EDGE – Our friends at the Economic Policy Institute and the Apollo Alliance looked at where jobs would be generated if the federal Clean Energy Development for a Growing Economy (Clean EDGE) Act were passed. The EPI/Apollo study finds that the Clean EDGE Act would spur $49 billion in renewable energy investment and create 530,000 U.S. jobs by 2009. Ohio, with our existing industrial infrastructure, would be a big winner, standing to gain almost 26,000 jobs.

But we haven’t gained ’em yet – Employment in Ohio snuck downward slightly since its recent peak in May, declining by 7,000 after last spring’s increase. Since June of 2005, when an overhaul of state taxes was signed into law with the intent of creating jobs, employment in Ohio grew by just 31,900 jobs, a rate of 0.6 percent. During the same period, the nation added 2.1 million jobs, for a growth rate of 1.6 percent. Read our JobWatch report here.

That’s all!
The Policy Matters Ohio Team 

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