While the tax reform law will provide tax cuts to Ohioans, those cuts may not provide the boost needed for future economic growth. Ohio State University economist Mark Partridge says Ohio’s manufacturers may see some benefit, but investment in workers will do more.
“I think Ohio might slightly benefit more than the country in the context that there’s some very favorable treatment for investment, and the kind of investment would likely be disproportionately in manufacturing,” Partridge says.
Partridge says most economists agree that around 70 to 80 percent of the tax cuts will remain with those who own corporations, like stockholders. Partridge says that only about 18 percent of the tax cuts will trickle down to workers through higher productivity.
Partridge says many economists think the tax reform plan “is a solution in search of a problem.”
“Our capital stock is near full utilization, work force availability is getting tighter, tighter, and tighter,” Partridge says. “There really isn’t that much room to grow and if we were, the Federal Reserve would start lifting interest rates.”
Partridge says more investment in education, vocational training and other work programs would improve opportunities for a future workforce or what he calls “human capital.”
“So what we really need is human capital development infrastructure, not necessarily a capital tax cut because we’re awash in capital globally and we have low interests,” he says. “So we don’t have a shortage of that, we do have a shortage of human capital.”
Partridge adds that he would also like to see more money spent on infrastructure for new roads and bridges, and expanded broadband in rural areas.
“Rather than one big boost in infrastructure, one of the things I would like to see is ongoing infrastructure and expenditures,” Partridge says.
In January, the White House is expected to turn its attention to infrastructure, but little new federal funding is expected in the proposal, which is yet to be revealed.