Not under review

Akron Beacon Journal - August 11, 2013
   

This Akron Beacon Journal editorial gets it right: Ohio’s $7.7 billion of tax expenditures — tax exemptions, deductions, credits and exclusions — “should receive regular scrutiny from lawmakers to determine whether they are serving the larger public interest.”

To his credit, the governor did make a start in the new two-year budget. He proposed, and lawmakers approved, the elimination of four tax breaks, saving $40 million a year. Gone is the income tax deduction for gambling losses. Erased, too, are the technology investment tax credit, the sales tax exemption for magazine subscriptions and the option that allowed an individual to be claimed as a dependent by more than one taxpayer.

Applaud the governor also for using his line-item veto to wipe out new tax breaks approved by lawmakers. For example, he rightly said no to reinstating the sales tax exemption for investment coins and bullion. He pursued a bold stroke in seeking to expand broadly the sales tax (with a lower rate), reflecting the altered landscape of the economy. Unfortunately, the proposal fumbled badly on the details.

Yet, ultimately, as Policy Matters Ohio explained in a report released last week, the final version of the budget added eight new tax breaks, the largest a top priority of the governor, tax relief on business income. This break translates into $1 billion in lost revenue for the biennium. Notably enough, there is little evidence to indicate the relief will deliver the new jobs the governor touts.

The editorial notes that still missing “is a mechanism for consistent review of tax expenditures. By contrast, other states have moved ahead.”

Policy Matters Ohio highlighted the effort in the state of Washington, where the review process includes a sunset requirement in 10 years. Some Ohio tax breaks date to the 1930s and 1950s. In Washington state, each new tax break must include a statement of purpose and establish goals and objectives for measuring its effectiveness.

Such an approach actually has broad support in Ohio. Chambers of commerce representing the larger metro areas have pushed for a review. So has a trio spanning the political spectrum, the Buckeye Institute for Public Policy Solutions, the Greater Ohio Policy Center and the Center for Community Solutions, even citing tax breaks deserving immediate closure. One attempt by lawmakers to take up the cause fizzled. Now they are moving to try again. They could use the support and assistance of the governor. After all, he often jabs wasteful tax breaks. Surely, he sees the value in regularly reviewing such a huge amount of spending.

Not under review, the Akron Beacon Journal, August 11
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