Blackwell Answers Flat-Tax Critique

Hannah Report - October 4, 2006

The Hannah Report

Secretary of State Ken Blackwell returned to the flat tax question Tuesday following a study released by Policy Matters Ohio, which focused on the purported impact of an across-the-board 3.25 percent rate on the middle class. The gubernatorial challenger continued to emphasize tax amnesty for a vast number of poor Ohioans while also noting the apparent benefits of a $1.2 billion rollback on small business.

“With the third highest tax burden in the nation, Ohioans pay too much in taxes with little to show,” Blackwell said. “Our high taxes chase away good paying jobs and opportunities. As governor, I will cut taxes and create an environment that will bring jobs and prosperity back to our state.”

Blackwell said the plan offers “immediate total tax freedom” to filers earning less than $20,000 a year, removing nearly one million low income families from the tax rolls. In addition, he said, the plan would cut taxes
for over 300,000 small business owners currently paying primary business taxes through their personal income taxes.

The plan seeks the removal of four of Ohio’s nine tax brackets as a step toward a single-rate system.

Ohioans currently paying less than 3.25 percent would receive an income tax rate freeze and keep current deductions.

Blackwell also called for accelerating the General Assembly’s 21 percent income tax cut from five years to three years, one year faster than modifications currently proposed under HB626 (Calvert). He said the move would speed up tax cuts for 5.3 million Ohioans. Lost revenue would be offset by the 3.5 percent cap on state spending increases passed into law this summer — the so-called legislative TEL triggered by controversy over

Blackwell’s constitutional amendment — along with Medicaid savings recommended by the Ohio Commission to Reform Medicaid, and economic growth.

Blackwell pointed out that Illinois, Indiana, Michigan, and Pennsylvania already have the flat tax. He noted, however, that each state has varying levels of deductions based on personal income and other factors.

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