Tuesday, October 10, 2006
Yet Another Useless Ranking
Inc. magazine released its ranking of state governors, at least those running for re-election this year, based on what they call “small business friendly” criteria. These criteria include tax and fiscal policy, work force and economic development, as well as spending on health care and education, and regulatory issues. They even gave bonus points to governors for being “good cheerleaders” for their state. But as is usual with these types of rankings, many of the criteria are not very useful in depicting the ranking the analyst is trying to achieve, making the governor ranking essentially meaningless.
For example, the governor of South Carolina was given the magazine’s lowest rating (one star), despite his push for a major tax cut. He was criticized for not raising the cigarette tax to pay for an extension of publicly funded health benefits to those employed by small businesses. Surely, there are other ways of helping small business owners with health costs besides shifting the burden to taxpayers. Apparently, according to Inc. magazine, taxes are as good a way as any.
On the other hand, Michigan’s Governor was given a three star rating while her state “was one of only three states to record net loss of jobs” in 2005 and the only state to do so without having been struck by a natural disaster. She also vetoed the legislature’s efforts to speed up the phase out of Michigan’s single business tax, a very onerous tax. The magazine did praise her for using $38 million in tax credits to lure internet giant Google to relocate its online advertising program to the state with the promise of 1,000 jobs.
Furthermore, the magazine gives three stars to the governor of Oklahoma essentially for being the beneficiary of high oil prices. With oil topping $70 per barrel, the state’s oil industry paid off handsomely. With this influx of cash, which as it turns out was only temporary as prices have fallen to under $60 in recent weeks, the governor extended health care benefits to workers at small businesses—again having state taxpayers pick up a tab. What will become of his extra spending now that the price of oil has started to fall? Will the taxpayers, including all businesses, be asked to make up the difference? The ranking methodology really is distorted on this point.
While there are some good things about the magazine’s rankings, like giving high marks for cutting taxes and extending tax credits to businesses, especially start ups, the list is fraught with applause for increasing government spending on things like a state funded spaceport (New Mexico) and subsidizing ethanol production (Kansas). They even give high marks to the Governor of Minnesota notwithstanding his use of taxpayer funds to build new sports stadiums in Minneapolis.
And what does the magazine think of Pennsylvania’s Governor? They give him high marks for being a “cheerleader” for the state’s economic development program—a program that has been doling out taxpayer money that “mostly benefits large corporations”. The magazine gives him high marks for convincing “PNC Financial Services to offer up to $100 million in credit lines to small businesses…” They fail to mention that PNC was the beneficiary of the Governor’s dip into the taxpayers’ wallets to give the banking giant $30 million to build a new skyscraper in Pittsburgh.
They also fail to mention his raising of the personal income tax or his backing of the legislative pay raise, which was ultimately repealed. Their reason for giving him only two of four stars, is because “he has been accused of paying no more than lip service to small business.” There is no mention of Pennsylvania’s stifling business taxes other than to say that he signed a measure in July to provide some tax relief for businesses. But as a recent Policy Brief noted, most of the positive changes to the business tax climate were enacted before the current administration took office and the Governor vetoed earlier business tax cut legislation saying it was too expensive. He also vetoed needed tort reform legislation. Funny that Inc. would miss that since Pennsylvania is consistently rated as one of the most litigious states.
http://www.inc.com/magazine/20061001/governors.html
For example, the governor of South Carolina was given the magazine’s lowest rating (one star), despite his push for a major tax cut. He was criticized for not raising the cigarette tax to pay for an extension of publicly funded health benefits to those employed by small businesses. Surely, there are other ways of helping small business owners with health costs besides shifting the burden to taxpayers. Apparently, according to Inc. magazine, taxes are as good a way as any.
On the other hand, Michigan’s Governor was given a three star rating while her state “was one of only three states to record net loss of jobs” in 2005 and the only state to do so without having been struck by a natural disaster. She also vetoed the legislature’s efforts to speed up the phase out of Michigan’s single business tax, a very onerous tax. The magazine did praise her for using $38 million in tax credits to lure internet giant Google to relocate its online advertising program to the state with the promise of 1,000 jobs.
Furthermore, the magazine gives three stars to the governor of Oklahoma essentially for being the beneficiary of high oil prices. With oil topping $70 per barrel, the state’s oil industry paid off handsomely. With this influx of cash, which as it turns out was only temporary as prices have fallen to under $60 in recent weeks, the governor extended health care benefits to workers at small businesses—again having state taxpayers pick up a tab. What will become of his extra spending now that the price of oil has started to fall? Will the taxpayers, including all businesses, be asked to make up the difference? The ranking methodology really is distorted on this point.
While there are some good things about the magazine’s rankings, like giving high marks for cutting taxes and extending tax credits to businesses, especially start ups, the list is fraught with applause for increasing government spending on things like a state funded spaceport (New Mexico) and subsidizing ethanol production (Kansas). They even give high marks to the Governor of Minnesota notwithstanding his use of taxpayer funds to build new sports stadiums in Minneapolis.
And what does the magazine think of Pennsylvania’s Governor? They give him high marks for being a “cheerleader” for the state’s economic development program—a program that has been doling out taxpayer money that “mostly benefits large corporations”. The magazine gives him high marks for convincing “PNC Financial Services to offer up to $100 million in credit lines to small businesses…” They fail to mention that PNC was the beneficiary of the Governor’s dip into the taxpayers’ wallets to give the banking giant $30 million to build a new skyscraper in Pittsburgh.
They also fail to mention his raising of the personal income tax or his backing of the legislative pay raise, which was ultimately repealed. Their reason for giving him only two of four stars, is because “he has been accused of paying no more than lip service to small business.” There is no mention of Pennsylvania’s stifling business taxes other than to say that he signed a measure in July to provide some tax relief for businesses. But as a recent Policy Brief noted, most of the positive changes to the business tax climate were enacted before the current administration took office and the Governor vetoed earlier business tax cut legislation saying it was too expensive. He also vetoed needed tort reform legislation. Funny that Inc. would miss that since Pennsylvania is consistently rated as one of the most litigious states.
http://www.inc.com/magazine/20061001/governors.html
