GOP tax plan for Ohio: fair or flawed?
Posted June 21, 2013 in Press Releases
This article by Jim Siegel cites research by Policy Matters showing that "Most Ohioans would pay more in property and sales taxes while also paying new taxes on downloaded books and music, in exchange for state income-tax cuts during the next three years."
Business owners would receive an even larger income-tax cut under the tax plan that Republicans intend to add to the two-year, $61.7 billion budget before it passes next week.
Siegel quotes Zach Schiller: “While there are some positive elements, we are shifting away from an income tax, the tax that is Ohio’s most fair because it is base on your ability to pay,” said Zach Schiller, research director for Policy Matters Ohio, a progressive research organization. “The idea that we can just expect milk and honey from income-tax cuts is a figment of the imagination of people putting this tax plan together.”
The plan includes a 50 percent deduction on business income up to $250,000. The Senate-passed budget allowed the deduction on up to $750,000 in income.
For all Ohio taxpayers, the plan would provide an 8.5 percent income-tax cut this year, retroactive to Jan. 1, then 9 percent next year and 10 percent in 2015.
For taxpayers earning between $22,000 and $44,000, a 10 percent cut would save an average of $79. For those earning $44,000 to $88,000, the average cut would be $209.
But lawmakers cannot make those kinds of income-tax cuts without additional money. The plan would increase the state sales-tax rate from 5.5 percent to 5.75 percent and reduce from $1 million to $500,000 the commercial-activities-tax exemption that is paid by businesses.
The plan also would affect property owners by eliminating in the future the 12.5 percent currently paid by the state on local property-tax levies. As a result, future property-tax levies, not including renewals, would cost Ohio homeowners 12.5 percent more than past levies. The plan would not affect how much a school or township collects from the tax.
Under the plan, those currently younger than 65 would not be able to take advantage of the homestead exemption if they earn more than $30,000 in income