More accountability needed for Ohio tax breaks
- March 22, 2016
Nearly $9 billion in tax breaks deserve same scrutiny as budget spending, Policy Matters testifies to committee.
For immediate release
Contact: Zach Schiller, 216.361.9801
Ohio’s 128 tax exemptions, credits and deductions – known as “tax expenditures” – add up to nearly $9 billion a year in foregone revenue, roughly the same amount as what we spend on K-12 education.
Tax breaks deserve the same scrutiny as budget appropriations, said Zach Schiller, research director of Policy Matters Ohio, in written testimony submitted today to the 2020 Tax Policy Commission. That joint legislative committee is examining Ohio’s tax system.
“Though some tax expenditures have worthwhile purposes, many have continued for decades, draining state revenue, providing a special advantage, without an accounting for whether they serve their original purpose or any purpose at all,” said Schiller. He said that a permanent mechanism for regularly analyzing them should be approved.
He also recommended that:
- The 2020 Tax Policy Commission should request that the Department of Taxation and the Legislative Service Commission detail why each of these expenditures was originally approved, and whether that purpose is being met now.
- House Bill 9, approved by the House last year and pending in the Senate, would be a useful step, though it needs to be strengthened. It would require a review of each tax expenditure every eight years.
- The legislative committee that would be created under House Bill 9 should remain a legislative committee, without representation of business or other outside interests.
- A significant number of existing tax expenditures should be repealed or limited. These include several that Gov. Kasich attempted to eliminate last year.
- The commission should examine further who is benefiting from our business tax breaks and whether that is appropriate. This includes credits against the commercial activity tax. Overall, nearly $81 million or 43 percent of CAT tax credits reported last fiscal year went to just the 68 companies with Ohio gross receipts of $1 billion.
- It should consider means-testing property tax rollbacks, as Govs. Voinovich and Taft proposed.
“As Gov. Voinovich proposed with the rollbacks, funds made available from unproductive tax breaks should be invested in public services, not given away in tax cuts,” Schiller said.
Policy Matters Ohio is a nonprofit, nonpartisan state policy research institute with offices in Cleveland and Columbus.