Awaiting the Ohio Senate’s move on taxes
Legislators in Columbus are heading into the stretch run of approving a two-year budget, and much of the attention has focused, as it should, on how much the Senate will add to the $1.2 billion in tax reductions approved by the House over two years. They’ll probably ramp up the tax cuts, even though that strategy has failed to boost Ohio’s job performance and has skewed the tax system more in favor of the most affluent.
But when it unveils its budget Monday morning, the Senate majority also will answer another, less prominent question: Will it restore any of the measures Gov. Kasich proposed to repeal or eliminate various tax breaks? The governor proposed, and the House scrapped, reductions in a number of credits and exemptions, including:
- Eliminating the credit that sellers of beer, wine and mixed beverages get for paying their alcoholic beverage tax a few weeks in advance;
- Limiting the amounts retailers can receive for collecting the sales tax, known as the vendor discount. Most states either have no discount at all or cap the amount, ensuring that big retailers do not reap a windfall. Indeed, Tax Commissioner Joe Testa said in testimony that Ohio’s 0.75 percent discount “essentially functions as a profit center” for big-volume retailers.
- Cutting the sales-tax exemption for trade-ins of used cars and boats in half, and
- Repealing the 2.5 percent discount that distributors of cigars, chewing tobacco and other tobacco products get for timely payment of their taxes. “It shouldn’t be necessary to reward businesses for paying their tax on time,” as Testa noted.
Altogether, these changes would generate more than $130 million in extra state revenue by the 2017 fiscal year. Gov. Kasich also proposed broadening the sales tax so it that would extend to additional services, including lobbying, public relations and debt collection. And he wants to limit the income-tax deduction Ohioans can get for Social Security and four retirement income or senior credits to those with income of less than $100,000 a year.
In its budget bill, the House got rid of all of these proposals, except the last ones involving the Social Security deduction and similar credits. It added a variety of small credits and exemptions, while eliminating one existing credit: The income-tax credit for political contributions made to campaigns for statewide office, the General Assembly and the state board of education.
Whose lead will the Senate follow? And if it limits any of these tax breaks, will the added revenue just go into unproductive tax cuts that favor the most well-to-do? Inquiring minds want to know.