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Wah Wah We're Poor! Why?

11/03/04 | by steveg [mail] | Categories: WiFi

Is it really any surprise that Ohio is in the economic dumper and Cleveland is the poorest, city in America? Are we really that blind to not see why? How come we whine and cry about our predicament, looking outside the region for the reason and more importantly look out there for our solution?

Well the real reason for our dismal state is right in front of us with yesterday's election as the most recent example. We do it to ourselves! Call it reaping what you sow, karma, Steinfeld's even-steven, whatever, but the responsibility is Ohio's intensely stupid and myopic attitude. Three cases in point is shown in this election, and no, one of them isn't which clown won the three ring circle we call a candidate election.

First, Cleveland did not pass the operating levy for the schools. Though still pitiful in performance, the momentum of the progress of improvement is stopped dead. The thing is that it will probably take four or five years to undo the damage of every single year of education on the cheap and during those recovery years (if we get any) we still lose a generation of potential contributors to our society. Apparently, we still seem to like our citizenry dumb so we can make votes like this and maintain the steady decline that we enamored with. Cleveland simply could NOT afford to NOT pass this bond. We might as well start engraving a headstone because the hole we're in now just turned into a grave for our economic hopes.

Second, Ohio passing prop 1 was not as much an indictment of same sex marriage, as an indictment of tolerance for differences. Richard Florida, the guru of the creative class, doesn't say we need more gays to have innovation and economic growth, but that we need tolerance for new and different ideas. Ohio just said that they don't want any different ideas. The argument that this "preserves marriage" while the success rate, without this law still hovers around 50% is ludicrous. Same sex unions already face discriminations and obstacles, without the help of this legislative intolerance. We might as well get out the "No Irish Need Apply" signs and reinstitute restricted hotels and restaurants because intolerance is a virus and spreads quickly and it kills ideas and economic growth. Welcome back, Jim Crow.

Finally, the biggest bonehead move of the entire region, deciding to institute an S-Corp corporate tax. Many cities in northeast Ohio decided to add this suicidal move in their desparation for money. S-corps are a form of incorporation that passes the profits through to the owners or shareholders of the company, much like the LLC, limited liability company. The S-corp is a favorite for new and small businesses. So this new municipal tax is anti-entrepreneur and anti-small business! The cities just drove out the best bet for creating business, creating jobs, and creating an engine for economic growth!

Though I have been talking about the danger of this tax through my NEOBio work, no media or other entrepreneurs picked up on it. Where was the mighty and rich Jumpstarts, Nortechs, BioEnterprises, NEOSAs, and the other supposed entrepreneur networks? Little NEOBio with its Dilbert escapee director and two thin dime coffers couldn't do it alone.

Why are we poor? Because we shoot ourselves in the foot so often that we think limping is a normal gait.



Comment from: Bill [Visitor]
BillSteve, please explain why it's a bad idea for "the City of Cleveland continue after December 31, 2004 its current tax on an S corporation shareholder’s distributive share of net profits"? It looks like it's just the application of the local income tax to the shareholder's personal income, same as wages. Am I missing something?
11/04/04 @ 09:56
Comment from: steveg [Member] Email
stevegBill, You may have touched a point of my misunderstanding. It was my understanding that this was a separate tax, and that the personal income tax was also in force, ie double dipping similar to a payroll tax and then individual employee's wage tax of the C-corp.

If somebody knows that I'm in error, please correct me. I'll publish a retraction. Of course, if the dozens of people I spoke to on this knew I was wrong, WHY DIDN'T THEY CORRECT ME?

Sometimes the midwest politeness is more damaging than helpful.
11/04/04 @ 15:02
Comment from: Scott Kovatch [Visitor]
Scott KovatchThis was not a new tax, but rather a continuation of an old tax. "...[M]ost other Ohio municipalities have always collected income taxes on distributive shares from S corporations. However, a Bratenahl resident who was being taxed on shares in an S corporation located in Willoughby took issue. The case ended up before the Ohio Supreme Court. The court in June 2001 sided with Bratenahl. In reaction, the Ohio General Assembly passed legislation in late 2002 limiting taxation to direct wages received from S corporations, not their distributive shares. But the measure gave municipalities a chance to continue taxation as before -- if they got voter approval."

See this story on the Beacon-Journal's site.

11/05/04 @ 21:49