Kasich’s bank-tax plan has support: proposed changes could raise $30 million
Posted March 28, 2012 in Press Releases
Banks big and small appear to be getting on board with Gov. John Kasich’s new financial institutions tax.
“I don’t think you’ll find a banker here today who doesn’t think it’s a great idea,” said Barry Ritchey, president of Standing Stone National Bank in Lancaster. He was at the Statehouse yesterday for a lobby day sponsored by the Ohio Bankers League.
“For us, it can defray some of the expenses of the regulations coming down the pike.”
The Kasich administration has said all along that the vast majority of banks, particularly small community banks, would benefit from his proposed tax plan, which is designed to stop large, multistate banks from moving equity to affiliates to duck Ohio taxes.
It also would capture tax revenue from out-of-state banks that have no physical presence in Ohio but do business here.
The estimated $30 million raised from those changes would be used to lower the tax rates for other banks.
The Community Bankers Association of Ohio sent a letter to lawmakers this week saying it supports the proposal, because it brings fairness to the tax system and provides more capital to meet regulatory requirements and increase lending.
The state’s largest bank also approves of the plan.
“We think it makes sense for Ohio,” said Jeff Lyttle, spokesman for JPMorgan Chase & Co., which is based in New York but has 298 branch offices in Ohio and employs 23,000 people, including 19,000 in central Ohio. “We believe in doing our fair share.”
Chase paid $71.9 million in corporate franchise, payroll and real-estate taxes in Ohio last year, Lyttle said. Kasich’s plan targets the corporate franchise tax.
Chase backs Kasich’s plan because it would “modernize and simplify the tax code, lower the tax rate, and create more fairness across the system,” Lyttle said. “We certainly expect to benefit from reduced administrative burden through the simplification of the tax code.”
Kasich even got some praise yesterday from Zach Schiller, research director for the liberal-leaning Policy Matters Ohio, who told the House Ways and Means Committee that he applauded the governor for eliminating bank tax loopholes.
But Schiller said he opposed taking the additional $30 million from closing loopholes and giving it to other banks at a time when banks are thriving. Instead, he said, the state should use that money to “put a dent” in the massive costs of the state’s foreclosure crisis through efforts such as foreclosure counseling and the demolition/rehab of abandoned homes.
If that’s not to lawmakers’ liking, they could use it to help schools or local governments that were cut significantly under the two-year state budget, Schiller said.
Rep. Peter Beck, R-Mason, chairman of the Ways and Means Committee, said he favors giving the money back to the businesses.
Mike Adelman, top lobbyist for the Ohio Bankers League, offered measured support for the tax plan.
“We are fully confident that ... we can make some further improvements here over the next couple of weeks,” he said. “We want to make sure there are not any unintended consequences.”