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A Payday Post-Mortem
By Marc Kilmer
In Biblical times, the people of Israel symbolically placed their sins on a goat and sent it into the wilderness. The modern idea of a scapegoat - an innocent person who takes the blame for the sins of others - comes from this historic practice. This notion is appropriate in light of the recent banishment of payday lenders from Ohio. The politicians who are presiding over a tax and regulatory structure which is killing the state's economy found a scapegoat in payday lenders. They placed the blame for Ohioans' financial woes on the backs of these businessmen and sent them away. Just as in ancient Israel, however, the sins of these politicians will not go away with the departure of these modern scapegoats.
Economic Freedom Produces Growth
The
Columbus Dispatch
reports, "General Motors
said yesterday that it will close its sport-utility-vehicle plant south
of Dayton in Moraine, one of four plants the company is shutting down
in North America. The move, which will cost Ohio roughly 2,400 jobs, is
an exclamation point in a year of grim job news."
In
Ohio
Needs More Companies Like Skybus,
Buckeye Institute
Senior Fellow Sam Staley writes, "Ohio's economic future rests
in the state's ability to create a business climate that fosters
entrepreneurship without prejudice from a broad base. We need to
improve our business climate for entrepreneurship because, in the words
of economists Noel Campbell and Tammy Rogers, the 'primary impact of
economic freedom on entrepreneurial activity lies in permitting
entrepreneurs to see and exploit economic opportunities.'"
A Good Idea Coming from Columbus
"Ohio State House Rep. Thom Collier has co-sponsored a bill that would abolish the state's personal income tax by 2019. He and Republican Rep. John Adams, the other co-sponser of House Bill 534, unveiled the measure in April....
"The bill proposes to reduce the current personal income tax rate by 10 percent each year for 10 years, beginning in 2010. By 2019, Ohioans would pay no personal income tax to the state," according to the Mount Vernon News.
In Reforming Ohio's Tax System for the 21st Century, Buckeye Institute fellow Robert Lawson writes, "As Ohio begins to sort out the challenges facing its tax code in the coming century, we must issue a note of warning. In the last century, the government added new layers of taxes to the older ones and the government grew massively. We cannot repeat this mistake. As we look to emphasize the broad based sales tax, users fees, and even property taxes, we must reduce and ultimately eliminate the income tax and other distorting selective taxes. In the final analysis, Ohio cannot be competitive with other states and nations in terms of attracting human and physical capital unless the overall level of taxation is reigned in."
Payday Lending Ban Won't Help Borrowers
The Dayton Daily News reports, "With a bipartisan posse of legislators looking on, Gov. Ted Strickland signed legislation aimed at ending the so-called 'debt trap' caused by short-term payday loans."
In
his testimony
before a Senate committee on the payday lending ban, Buckeye Institute
guest scholar Dr. Tom Lehman noted, "the unintended consequences of
this proposed regulation will undoubtedly leave payday loan customers
in Ohio worse off from their own vantage point and given their very
personal circumstances. Borrowers without access to payday loans may
instead incur greater costs in the form of late fees on utility bills,
utility shut-off and reconnect charges, uncompleted auto repairs,
and/or bounced check charges, costs that could amount to considerably
more than the costs of a payday loan, both in terms of time and money.
Others may attempt to borrow cash from pawnbrokers, pawning personal
property that they would prefer to keep in exchange for a short-term
loan. Still others may seek credit options in informal markets without
legal protection, or borrow from relatives who take pity on them.
Borrowers, by their very actions in choosing a payday loan over these
alternatives, reveal their preferences in favor of a payday loan given
their circumstances."
Buckeye Institute in the News
The Columbus Dispatch quoted Buckeye Institute President David Hansen in a story on the development of an "economic development supercenter" in Columbus.
The Hillsboro Times Gazette published Marc Kilmer's op-ed on the payday lending and David Kirpatrick's op-ed on public schools.
