May 23, 2005
May 23, 2005
On May 20, 2005, Policy Matters Ohio’s Research Analyst Jon Honeck testified before the Ohio Senate Finance & Financial Institutions Committee regarding the tax law changes in the biennial budget bill (H.B. 66). Dr. Honeck described how the proposed commercial activity tax would not fully replace all of the revenues from the corporate franchise tax and the tangible personal property tax, the two taxes that would be phased out. He also pointed out that the consultant’s study paid for by the state to model the impact of the tax law changes was incomplete and misleading because it did not take into account the need for spending cuts or other tax increases to make up for the revenue shortfall that would result from the plan. In addition, the testimony outlined some preliminary findings from an upcoming Policy Matters Ohio study that refutes the notion that Ohio’s income tax plays a role in our loss of population to other states.
In March, Dr. Honeck testified before three other legislative committees on earlier versions of the budget. He described how the tax changes would generate insufficient revenue in 2006-07, result in a net revenue shortfall of $2.1 billion by 2010 when compared to extending the current tax structure, and shift the tax burden from wealthy individuals to the poor and middle-class. The income tax cut would result in one-seventh of the reduced payments to the state being shifted to the federal government because of lower deductions on federal tax forms.
Within the state, a substantial amount of the income-tax cut would go to the top one percent of taxpayers. They’d get an average $8,080 tax break, while taxpayers with incomes of less than $16,000 a year would receive an average of $19 in savings. All families in the state would end up paying more when they use nursing home care, higher education or other services, while seeing quality of public services decline.
Why the Taft Plan for Income Tax Cuts is Not Good for Ohio
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The Taft Plan for Income Tax Cuts is Not Good for Ohio
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