Dayton Dies a Little More
by Mark Luedtke
Back in February, I received criticism
from readers, family and friends for writing:
Dayton leaders
say they want the city to become a center for high tech development.
I spent 20 years working in high tech in Texas, 15 in Austin, and I
can tell you Dayton leaders are not serious about making this happen.
The people of Dayton and Ohio may not
acknowledge our problems, but NCR understands them. That's why NCR is moving its
headquarters from Dayton to an Atlanta suburb. The people of Dayton
are hurt and angry. The Dayton Daily News reported that, “Local
officials in Ohio grumbled that NCR never even let them compete.”
But that anger is misplaced. We are not entitled to NCR. NCR doesn't belong to us. It belongs to its
stockholders. As for local and state officials, they've had 35 years
to compete, but all they've done over those 35 years is make
the business climate more punishing. Who can blame NCR for not
wanting to talk in that environment? We shouldn't be angry at NCR for
moving to greener pastures. We should be angry at ourselves and our
elected representatives for making Dayton and Ohio so unfriendly to
business.
The question isn't why did NCR leave.
The question is why did NCR stay here so long despite the punishing
business climate we created. NCR was far more committed to the
success of Dayton and Ohio than Dayton and Ohio were committed to the
success of NCR. You can't have a healthy relationship when one side
does all the giving and the other does all the taking. Our failure to recognize that government policies are forcing
even the most socially conscious business icons of our community to
leave in order to stay competitive is delusional and self-destructive. Until we face
reality, Dayton will accelerate as one of Forbes's 10 fastest dying
cities.
The Tax Foundation ranks Ohio 47th
in business tax climate. If NCR CEO Bill Nuti had tied on a blindfold
and thrown a dart at a map of the US, 46 out of the 50 states he would have hit would have been better for his business than Dayton,
Ohio. Ohio is at the bottom of the heap with California, New York and New
Jersey, respectively. Even Michigan, basket case that it
is, has a better business tax climate than Ohio. Please don't shoot the messenger for reporting we're suffering from
self-inflicted wounds.
Anybody who thinks this move by NCR is the
tip of the iceberg had his or her head buried in the sand for the last
35 years. NCR began its exodus from Dayton in the early '70s when
Ohio implemented the income tax. NCR has 2,800 employees in
Georgia today and only 1,300 in Dayton. NCR has been moving out of Dayton
for 35 years. This isn't the tip of the iceberg. It's the caboose of
the train.
The same is true for the city as a
whole. As I wrote in February, downtown is practically a ghost town.
Dayton's population has dropped every decade from a high of 262,332
in 1960 to an estimated 155,461 in 2007. If you saw those numbers
without knowing what city I was talking about, you'd think I was
talking about a dying city in a Soviet satellite state. Big government
policies are destroying our city and our state.
One of the biggest reasons is the
progressive income tax. The income tax is a tool used by government to create poverty. That's why
Marx listed it second of his ten requirements for implementing Marxism.
The income tax punishes achievement and rewards lack of achievement. As a result Ohio has a lot less of the former and a lot more of the
latter. The same is true for the country at large. We should be happy
NCR didn't leave the US for even greener pastures, but socially
conscious NCR chose to move to Georgia where it could create 2,000 more jobs - something it couldn't do
here.
Writing in the Wall Street Journal, Arthur Laffer and Stephen Moore describe exactly how much damage state income taxes do to the economy:
Updating some research from Richard Vedder of Ohio University, we found
that from 1998 to 2007, more than 1,100 people every day including
Sundays and holidays moved from the nine highest income-tax states such
as California, New Jersey, New York and Ohio and relocated mostly to
the nine tax-haven states with no income tax, including Florida,
Nevada, New Hampshire and Texas. We also found that over these same
years the no-income tax states created 89% more jobs and had 32% faster
personal income growth than their high-tax counterparts.
Georgia may not be in that top nine, the Tax Foundation ranks it 27th, but it's a heck of a lot better than Ohio and has the labor pool and international and customer connections NCR needs.
Every dollar government spends also harms our economy because we pay for it twice. First we pay for it in taxes (and we have to pay the
interest when we borrow, President Obama). Second, every dollar
government spends makes our economy less efficient. You might have
wanted to spend $100 on shoes which would promote productive local
business, but when government takes your $100 from you by force, it spends
it on non-productive government instead. Not
only don't you get your shoes, you pay again because of lost
economic activity and lost jobs in the area that leads to depressed wages. Every government job is a job lost from the productive private sector.
Government regulations
and mandates also pervert our economy and give an unearned benefit to some party at the expense of the rest of us. Voluntary exchange by
definition benefits all parties involved and is the basis of a strong
economy. Government force is the enemy of prosperity. Unfortunately
government force is all the rage in Dayton, Columbus and Washington.
We know how to attract and keep
businesses – tax incentives. Politicians do it all the time. Gov.
Strickland reportedly offered NCR $31 million at the last minute to
offset the $58 million offered by Georgia, but that was far too little, far
too late. Mayor McLin offers tax breaks to politically powerful businesses. But this begs the question: why don't we lower taxes for everybody? Why
should we allow politicians to reward their politically connected
favorites at our expense? If we cut spending and lowered taxes for
everybody, businesses wouldn't leave and new businesses would come to
Ohio. Everybody would be rewarded, and we'd have a growing, thriving
economy that would generate prosperity for all.
It's too late to do anything to keep
NCR, but we have the power to change Dayton government for the
better. Once we do that, we can hold it up as a model for state
government. The solution is simple: embrace freedom instead of
government force. We should dramatically reduce the city budget. We
should contract out all services we can. Since all government
spending harms economic development, government spending for economic
development should be stopped immediately. We should abolish the
income tax and cut other taxes to correspond to spending cuts. We
should market Dayton in other Ohio cities and high tax states around
the country like California, New York and New Jersey as a no
income tax, low tax city.
--
Study documents the tremendous damage high taxes to do people. This is a must read essay.
Updating
some research from Richard Vedder of Ohio University, we found that
from 1998 to 2007, more than 1,100 people every day including Sundays
and holidays moved from the nine highest income-tax states such as
California, New Jersey, New York and Ohio and relocated mostly to the
nine tax-haven states with no income tax, including Florida, Nevada,
New Hampshire and Texas. We also found that over these same years the
no-income tax states created 89% more jobs and had 32% faster personal
income growth than their high-tax counterparts.
You don't
have to be Milton Friedman to understand that if you want prosperity in
your city, state or country, you dramatically lower taxes, abolish
income taxes and cut government spending accordingly. Period.
Dayton
NCR employees bitter, but at least one gets it. NCR is a
global company and Georgia provided global services. The Tax Foundation ranks
Ohio 47th in business tax climate.
Michigan is only 20th. Michigan has a better business tax climate than Ohio.
Georgia ranks 27th. The question isn't why did NCR move. The question is why did NCR stay here and get punished so long.
California ranks 48th.
New York ranks 49th.
New Jersey ranks 50th.
Dayton population.
"The basic argument of
lower taxes, lower personell costs, and a larger labor pool and air connections probably were deciders [for NCR]." Ohio
implemented the income tax in 1972, and NCR moved 10s of thousands of jobs out of Dayton in the early 1970s. This can't be coincidence. This website says
Georgia's income tax is higher than Ohio's. What about corporate tax?
Georgia gave NCR
$56.9 million in tax breaksto incentivize it to move to Georgia, but NCR CEO Nuti said the tax
breaks, while nice, were not a major factor in the decision to move.
Dayton Business Journal is overflowing with NCR stories. Nuti
details the criteriaused in selecting new location. Gov. Strickland offered NCR $31.1
million in incentives to stay, but Dayton City Commissioner accuses NCR
of
not returning phone calls. NCR was
founded in 1884, and NCR already has 2,800 employees in Georgia compared with 1,300 in Dayton.
"
Local officials in Ohio grumbled that NCR never even let them compete."
What a joke. Ohio and Dayton had 125 years to compete. Why didn't they
give NCR, and every other business in Ohio and Dayton, tax breaks last
year? The year before? That smacks of entitlement mentality. No matter
how much burden the city, county and state placed on NCR, the
aristocrats felt entitled to have NCR remain in Dayton. This should be
a wake up call, the burden of local and state government are driving
businesses and people out of Ohio, but our aristocrats are sulking
instead of waking up.
