Although Ohio Governor John Kasich remains undecided, his visit through the Granite State this week suggests he is mounting what could fast become a dark horse candidacy for the Republican presidential nomination. Should he decide to, a Kasich run could be good for the party – depending on which Gov. Kasich shows up.
In Ohio, the Governor’s reputation for exercising fiscal responsibility helped vault him to reelection last fall by a two-to-one margin across most the state. Yet, only months later, the Governor is now playing a very different tune. His latest budget proposal seeks to shift tax burdens around on small businesses while imposing $5.2 billion in tax hikes on sales, commercial activity, energy and tobacco.
The plan, which seeks to levy such growth constraining new taxes as a means of funding income tax reductions, has drawn sharp criticism from both sides of the political spectrum as a poor strategy for incentivizing growth. What’s more, the plan seems to be part of a trend defined by spending that far outpaces growth and inflation in Ohio in contrast to the fiscal restraint that has defined the Kasich administration to date.
In order to have a shot at the White House in 2016, Republicans need a principled candidate who will support economic development – and the industries that achieve it. By proposing to hike taxes on the business community at large while further complicating the already labyrinthine small business tax code, Gov. Kasich is already giving voters reason to second guess whether he is the right person for the job, no pun intended.
Each year small businesses create about two-thirds of all net new jobs, and they account for more than half of the private sector economy. Yet, for all their good work, small business owners face a tough outlook. Last year, the Code of Federal Regulations weighed in at over 175,000 pages, a rise of more than 20 percent over the past ten years. At the same time, federal and state tax codes have become increasingly complex, taking an especially heavy toll on small businesses that lack the resources of larger competitors. In a Gallup poll last year more than half of small businesses (53%) said taxes were hurting them “a lot.”
By the same token, the energy industry has been one of the few pillars of consistent growth in the economy – despite the Obama Administration’s heavy-handed tax and regulatory policy. While the U.S. economy shed more than 375,000 jobs between 2005 and 2012, the energy sector and the industries that support it added close to 300,000 over the same time, according to a report by the Small Business and Entrepreneurship Council (SBEC).
The energy revolution over the past decade has truly been the success story of our time – not for big business but for everyday hard working Americans. About 90 percent of energy production, including drilling, extraction, construction, operations and equipment manufacturing, is done by companies with 500 or fewer employees.
“Ohio’s Story” is a compelling one and should be marked by the tough decisions Governor Kasich is making to reduce spending rather than proposals to increase taxes that are sure to stem growth. Adding onerous and unpopular new taxes on the state’s business community, as Gov. Kasich proposed to do, is no way to expand the economy long-term, nor is offsetting small-business tax breaks with added layers of bureaucracy.
In his State of the State Address this year, Gov. Kasich said, “If you want to start a small business, if you’re an entrepreneur, if you’re a young person coming out of college, do it in Ohio.” He went on to say, “The prosperity created by our oil and gas deposits can be great not just for shale country.” He’s right, but he is sending a mixed message by complicating the tax code and adding greater tax burdens for both.
Gov. Kasich has a strong record in office. But before he launches a presidential bid, he’ll need to get straight his strategy for empowering America’s job creators if he hopes to win Republican voters.
John Burnett is a Republican activist and financial services executive with over 20 years of experience at some of the world’s top financial services and business information companies. Follow John on Twitter @IamJohnBurnett