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Economy and Business


Ohio's big shift: Income vs. sales taxes
Gov. Kasich has provided just a partial breakout on the changes he has in mind.
by WKSU's STATEHOUSE CORRESPONDENT BILL COHEN


Reporter
Bill Cohen
 
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Under a major tax-overhaul Gov. John Kasich has proposed, Ohioans would save money with a phased-in 20 percent cut in the state income tax. But, depending on what they buy, they’d face a 5 percent sales tax on services that were never taxed before.

If you’ve been trying to figure out whether you’d be a net financial winner or loser, you’re not alone. Statehouse Correspondent Bill Cohen has been wondering the same thing.

COHEN: Kasich is providing only partial estimates.

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Part of the equation, the savings part under the income tax cut, is fairly simple to solve. The Ohio Department of Taxation has charts showing how much money the average family of four, with two wage-earners, would save with the income tax cut.

Those with yearly adjusted gross income of $40,000 would save $133. Those with an income of $105,000 would save $662. And those with an income of $250,000 would save nearly $2,400.

But how much of those savings would be eaten up by people paying sales tax for the first time on many services?

That question is tougher to answer. That requires assumptions about how many movie tickets, sports tickets, cable TV services, haircuts, parking lot fees and other services a typical family buys in a year. That's because those are among the services that would be taxed for the first time.

The Ohio tax department is not providing those estimates, but a liberal think-tank opposed to this massive tax shift, is working on some calculations. 

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