Cut tax loopholes, not schools and hospitals
Posted July 07, 2020 in Press Releases
Policy Matters outlines ways to raise $1 billion, protect essential services
State and local governments face soaring needs but dwindling tax collections as the COVID-19 pandemic pounds the economy. Policy Matters Ohio today released a report that identified 20 tax measures the Ohio General Assembly can take to raise more than $1 billion and help avoid deeper cuts to essential services.
“Lawmakers should use the rainy day fund and Congress should provide more assistance,” said Wendy Patton, senior project director at Policy Matters and report co-author. “But in addition, Ohio’s elected leaders should take the opportunity to modernize the tax code and make Ohio’s upside-down tax system more fair.”
Overall, the poorest Ohioans pay nearly twice as much of their income in state and local taxes as the wealthiest 1% do. Ohio’s tax policies have widened the income gap between white and Black residents.
Ohio’s elected officials should tighten the spigot on the $10 billion annual loss of state revenues to tax breaks. Instead, the Tax Expenditure Review Committee (TERC), which is supposed to assess tax breaks and issue a report every two years, has missed its July 1 statutory deadline, and has not met at all.
“The committee needs to conduct its review, and recommend the reduction or elimination of tax breaks that no longer make economic sense for Ohio,” said Zach Schiller, Policy Matters research director and coauthor of the report.
The report, the first of several that will put forward revenue-raising measures to clean up the tax code and protect services Ohioans need, highlighted steps such as:
- Cutting the business income deduction known as the LLC Loophole in half;
- Modernizing Ohio’s oil and gas severance tax;
- Extending the sales tax to debt collection and lobbying;
- Eliminating the vendor discount that the biggest retailers like Walmart get for collecting the sales tax; and
- Rolling back the expansion of tax incentives included in the last budget bill.
“At this point in history, it is time to INVEST IN OHIO!” Gov. DeWine said in his state of the state speech last year. “That has become even more critical in the pandemic,” Patton said, “and Ohio policymakers must come up with the resources to do so.”