Midwest

Ohio’s Fiscal Middle Ground Ohio is the Midwest’s great median case—large enough to matter, diverse enough to reflect the full range of regional tensions, and fiscally positioned neither at the crisis end (Illinois) nor the model end (Indiana). Understanding Ohio means understanding a state managing genuine post-industrial transition while navigating intense interstate tax competition and the fiscal complications of being a genuine political swing state. Revenue Structure Ohio’s revenue mix has shifted significantly over the past two decades. A major tax reform in 2005 phased out the tangible personal property tax and the corporate franchise tax, replacing them partly with a Commercial Activity Tax (a gross receipts tax applied to business revenues) and partly with reductions not fully replaced—a net tax cut that reduced the state’s fiscal capacity. ...

Illinois’s Fiscal Crisis in Context Illinois is the cautionary tale of American state finance—a large, productive economy with a world-class city at its center that has nonetheless accumulated one of the worst fiscal positions of any state in the country. Understanding Illinois requires separating the genuine structural problems from the political dysfunction that has prevented their resolution, and being honest about how much of the crisis was a choice rather than an accident. ...

Indiana’s Fiscal Identity Indiana has cultivated a reputation for conservative, stable fiscal management that is largely deserved. Among the Great Lakes states, it stands out for maintaining a balanced budget through economic cycles, keeping debt levels low, and resisting the pension obligations that have crippled Illinois to its west. Understanding how Indiana got here—and what it costs—requires looking at the history, the revenue structure, and the political economy that has sustained this approach across decades and governors of both parties. ...

The Fiscal Character of the Midwest The Midwest is America’s fiscal middle ground—neither the high-tax, high-service model of the Northeast nor the low-tax competition model of the South. But within that broad characterization lies enormous variation, from Illinois’s catastrophic pension crisis to Indiana’s reputation for conservative fiscal management to Minnesota’s Scandinavian-inflected public sector tradition. The Census Bureau divides the Midwest into the East North Central and West North Central divisions, though the more meaningful distinction for fiscal purposes is between the industrial Great Lakes states and the agricultural Plains states. ...