Tax reform: Governor’s approach to bank taxes offers fairness, simplicity
Posted April 03, 2012 in Press Releases
His proposed bank-tax overhaul shows once again that Gov. John Kasich is capable of tackling entrenched problems with a fair and focused approach.
Despite some initial resistance from Republican legislators concerned about harming the industry with higher taxes, Kasich has gained wide support for his plan from financial institutions, which recognize that it will benefit all through its much-need simplification of the tax code.
The plan would close loopholes that let big, multistate banks avoid paying Ohio taxes; these institutions no longer would be able to move money around to other affiliates in order to duck taxes here. It also would generate revenue from out-of-state banks that do business in Ohio but do not have a physical presence here.
“We think it makes sense for Ohio,” said Jeff Lyttle, a spokesman for JPMorgan Chase & Co., which is based in New York but employs 23,000 people in Ohio. “We believe in doing our fair share."
Though Chase likely would end up paying more in taxes, Lyttle notes that the company expects to benefit from “reduced administrative burden through the simplification of the tax code.”
Even liberal groups that typically oppose Kasich had some praise for the plan. Zach Schiller, research director for Policy Matters Ohio, applauded the governor for eliminating bank tax loopholes with his proposal, though he suggested the revenue raised be used for foreclosure counseling or school funding.
But Kasich is correct in wanting the estimated $30 million the plan would raise to be used to lower tax rates for the majority of banks, especially small community banks, which have been at a tax disadvantage to large competitors.
This is a key point of the proposal, and the reason it has gained wide support among the industry: It would make Ohio a more attractive place to do business by benefiting themajority of financial institutions in the state. Closing loopholes and benefiting existing businesses with no net tax increase is a win for all.