Missed opportunity: General Assembly fails to close unproductive tax loopholes
Posted August 23, 2017 in Press Releases
After a nearly 12-year-long tax-cutting spree, the Ohio General Assembly finally approved a budget that doesn’t significantly cut revenues for public services or shift taxes onto those who can least afford it. Despite the progress, Policy Matters Ohio found that Ohio’s 2018-2019 budget still contains many new or expanded tax loopholes and fails to provide the revenue we need for important public services.
Although Governor Kasich vetoed some of the most expensive tax breaks and saved Ohio more than $500 million, the General Assembly passed a budget with new tax breaks. It cuts property taxes for farmers at the expense of school districts and residential taxpayers. It reduces the amount of municipal income tax some businesses pay on their profits. Meanwhile, the budget established a parallel state collection system that companies can use instead of filing with municipal tax authorities. This will not only cost cities money, but also strips away at their authority over an important revenue source. The budget also expanded the income-tax deduction for college savings accounts, which favors the affluent and is unlikely to significantly increase college attendance for low-income Ohioans.
“Ohio has a long way to go before we have a balanced tax system,” said Policy Matters Ohio Research Director Zach Schiller. “Instead of slashing unneeded tax breaks, or even taking modest steps to rein some in, the General Assembly added more. We are still losing too much revenue through tax breaks for the wealthiest at the expense of our roads, schools, job training programs and more.”
On a positive note, lawmakers cut two brackets out of the state income tax, eliminating it for a small number of low-income taxpayers. This will save taxpayers making between $10,000 and $10,500 a year a total of $2 million in 2019, according to the state budget office. The General Assembly took a modest step toward leveling the playing field between Main Street and online retailers by requiring collection of sales tax for certain out-of-state retailers that sell goods in Ohio.
“Years of tax cuts in hopes of spurring economic growth have sapped the state of much needed revenue, failed to produce jobs and shortchanged everyday Ohioans,” Schiller said. “While in some small ways the budget moves in the right direction, it’s going to take more than a few tweaks to get our tax code to where it needs to be.”