Last September, a federal court in Missouri convicted three men of making and selling phony State Department cards identifying the bearer as an "ambassador" with diplomatic immunity. They also sold license plates that were equally worthless and illegal. But it worked. So many people were taken in by their pitch that one of the men raked in more than $65,000 in about a year and a half.
Surprisingly, the scam is neither new nor isolated. Across the county, "sovereign citizens," as they call themselves, have for decades been conning the gullible and the desperate with a complex and constantly evolving anti-government ideology that offers the promise of living outside the law (including the tax code). A crew of them operating in Northeast Ohio in the late '90s and early 2000s ripped off so many people and filed so much absurd but threatening paperwork after their indictments that they landed in prison — one of them for 10 years.
And yet the con endures. An article I wrote about the local wackos in 2004 included this line: "The faithful believe that followers charged with crimes don't prove the theory wrong; they just weren't schooled enough to execute it properly." And this: "They seem to be reasonably intelligent and otherwise law-abiding men who were dazzled by a belief system so complex, so empowering, that it just had to be right."
This fervent belief in something demonstrably false reminds me a lot of modern Republicans.
Last week, the Ohio House's Republican caucus released a statement arguing that if we'd just done everything they wanted over the past few years, life would be pretty sweet right now. There's too much nonsense in it to deal with here, so let's focus on the biggest whopper, the one that goes right to the rotted core of conservative "thought": "The caucus introduced a plan to phase out the income tax with a goal of creating more jobs and deterring the populous [sic] drain caused by the unattractive tax climate."
It's like a form of Tourette Syndrome, the way Republicans blurt out "Tax cuts! Tax cuts!" no matter what the topic. It's their solution to everything, and it's no more practical than being told to pray for what you need. "The Party of No," as some Democrats have been calling the GOP, might more aptly be called "The Party of Slogans." Its proposals could fit on bumper stickers and make sense only if you don't give them a moment's thought.
Like this supposed "unattractive tax climate." The fact is Ohio has cut taxes — a lot — and continues to bleed to death.
The Small Business & Entrepreneurship Council's (SBEC) annual Business Tax Index "ranks the states from best to worst in terms of the costs of their tax systems on entrepreneurship and small business." The recently released 2009 index ranked Ohio 10th in the nation. Tenth, as in 40 other states have worse tax climates for small businesses, which Republicans are constantly telling us are the key to a vibrant economy. Getting into specifics, SBEC ranked Ohio's corporate income tax and corporate capital gains taxes sixth, which is effectively first because five states don't even assess them.
In SBEC's even more comprehensive Small Business Survival Index — which examines taxes and many other policies — Ohio finished almost as well, a very respectable 11th.
Earlier in '09, Ohio was awarded its third consecutive Governor's Cup by Site Selection, a trade magazine focusing on corporate real estate and economic development. Several factors went into Ohio's edging out second-place-finisher Texas, but Governor Strickland was quick to brag, "We are working in different ways to make Ohio among the most competitive states in the nation, with our tax structure being one of them."
You may recall that in 2005, the GOP-controlled state legislature passed, and the Republican governor signed, tax-slaying House Bill 66. In a 2009 report on the effects of that bill, Policy Matters Ohio noted: "The intent of the strategy was to reshape Ohio's tax code and deliver tax cuts to both businesses and individuals on the premise that these actions would improve the state's economy."
Well, guess what.
"If pre-2005 tax policies were the cause of Ohio's problems, then the changes should have at least prevented the state from falling any further behind national averages on key indicators such as economic output, employment growth and personal income," the report points out. "The results are very clear. Even before the current economic downturn, Ohio was not keeping pace with the nation. Key economic trends continued to go in the wrong direction after the tax overhaul. The report finds unmistakable evidence that the state's relative economic decline accelerated since H.B. 66 was passed."
But how could that be? Republicans have assured us for decades that tax cuts pay for themselves, and then some, because they fuel economic growth. There's just one problem: They don't. Economist Gregory Mankiw, chairman of President Bush's Council of Economic Advisers, found that even in the long term, "cuts in capital taxes juice the economy enough to recoup half of the lost revenue, and cuts in income taxes deliver a boost that recoups 17 percent of the lost revenue," according to The Washington Post. A return of 17 cents on the dollar? The real-estate schemes pitched in late-night infomercials might be a better investment.
Wait, it gets worse. The '05 Ohio tax overhaul also increased the burden on Ohio's middle class and poor citizens, while lightening the load of the wealthiest. In November '09, Policy Matters Ohio and the Cleveland-based Center for Community Solutions examined data from a national study on taxation and found: "Low- and middle-income Ohioans pay a much greater share of their income in state and local taxes than the state's most affluent do ... The report found that Ohio ranks 28th among states in the fairness of its tax system, based on the share of their income affluent Ohioans are paying in state and local taxes compared to that of lower- and middle-income Ohioans. Last time the study was done, which covered the law as of 2002, Ohio ranked 14th by this measure." More here.
And because of the deficits caused largely by tax cuts, the state is less able to help those who need it. Services for the poor and mentally ill are being slashed, public-transit systems are scaling back and public schools are told to wait yet another year (or 10) for the equitable funding method that courts ordered long ago. Use of federally funded food stamps is skyrocketing across Ohio, even in seemingly stable counties like Geauga (up 63 percent) and Medina (75 percent), according to The New York Times.
Who calls this progress? Oh, right.
Numbers and facts won't stop Ohio Republicans from howling over Democrats' delaying a planned income tax reduction as a way to deal with the deficit. They're calling it a "retroactive" tax hike, and surely will flog the old tax-related myths for the rest of the year, trying to pass themselves off as the creators of jobs and protectors of the middle class. If you believe that, please give me a call — I've got a State Department I.D. and license plate to sell you.