Tax break review committee should get to work
Posted September 28, 2017 in Press Releases
New Policy Matters report shows way forward
After a long delay, Ohio’s legislative leaders finally appointed members of the state’s new Tax Expenditure Review Committee, but they still have not met to begin reviewing the state’s more than $9 billion in annual tax breaks. A new report from Policy Matters Ohio lays out a blueprint for how the committee can begin its work and bring more balance to Ohio’s tax code.
“We look forward to Ohio’s policymakers bringing more transparency to the state’s tax exemptions, deductions and credits,” report author and Policy Matters Senior Project Director Wendy Patton said. “There is close scrutiny of expenditures for education, health care, infrastructure and the like, but not the spending in the tax code.”
The review committee is already months behind schedule in holding its first meeting. It still needs to be staffed, and to establish a process for conducting the review and a way for the public to provide input.
During the 2018-2019 budget period, Ohio’s 129 tax expenditures are predicted to grow in value by 8.3 percent, while tax revenue in the state’s General Fund will grow by 2.1 percent. Two-thirds of the foregone revenue is for business and economic development. The new business income tax deduction, enacted in 2013 and since expanded, has become one of the state’s costliest tax breaks – amounting to more than $1 billion a year. Much of the benefit of this tax break goes to a small share of the total. The truly small business owners and independent contractors who also qualify for this tax break get, on average, less than $1,000 a year: far from enough to hire anyone.
“Some tax expenditures make sense, but many do not,” Patton said. “The Tax Expenditure Review Committee can provide the analysis needed to figure out what is useful, what needs to be modified and what should be eliminated.”