Senators move to double value and expand eligibility for giant tax breaks for the wealthiest
Posted November 09, 2021 in Press Releases
Ohio Lawmakers ponder sweetening the pot for wealthy investors, yet refuse to commit to long-term, fair funding of public schools
Ohio Senators are hearing testimony on Senate Bill 225, which would boost tax breaks for wealthy capital gains investors and developers, expand eligibility beyond Ohio investors and allow the tax benefits to flow to entities with no connection whatsoever to the project.
“This bill would add $170 million to the $18 billion the state will forgo in tax breaks over the 2022-23 biennium,” said Wendy Patton, Senior Project Director for Policy Matters Ohio. “The two tax breaks doubled in SB 225 are piggybacked on significant federal tax breaks. All these public resources will increase private profits - but they should be used to expand opportunity and increase prosperity for all Ohioans, not just wealthy developers.”
SB 225 would double the $50 million Opportunity Zone tax credit, which subsidizes wealthy owners of capital gains under a federal tax break program. It would also expand the tax credit to investors outside of Ohio who pay no Ohio taxes, allowing them to sell (transfer) the credit to external entities with no connection to the project – a measure that was considered but rejected in House Bill 110, the latest budget bill.
The name of the Opportunity Zone program has not lived up to its name. In a recent blog, northeast Ohio’s “Fund for Our Economic Future” pointed out that they “…may not be the best and most effective means to support our long-term vision of a growing economy creating good jobs and rising incomes for everyone.”
SB 225 would also double the Historic Preservation Tax Credit (HRTC), increasing the size of awards throughout the state (while specifically excluding the state’s largest cities.) It would also enlarge the state’s refund to the developer if the tax credit exceeds tax liability.
The HPTC program is capped at $60 million a year. SB 225 would double that amount to $120 million a year in 2022 and 2023. Publicly available data from the Ohio Department of Development show that in some years, up to double the $60 million cap has been awarded because of variations in program rules. It is not clear whether an increase in funds is needed without better data on how much is actually available in subsidy over the next two years.
“Lawmakers should reject this bill,” Patton said. “They should use state resources to fully fund the Fair School Funding Plan, reduce the high cost of college tuition, restore revenue sharing with communities and make other investments that will improve the life of all Ohioans – not just wealthy investors.”