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Government & Politics

Lawmakers and Advocates Respond to Tax Cuts and Hikes in Gov. Kasich's Budget Plan

photo of Gov. John Kasich
ANDY CHOW
/
STATEHOUSE NEWS BUREAU
Gov. John Kasich released his final two-year budget proposal Monday and acknowledged some of it will be a hard sell.

State lawmakers and dvocates are responding to Gov. John Kasich’s proposal to cut income taxes and increase sales and other taxes.

Kasich is touting his last two-year budget as one that cuts income taxes by 17 percentwhile exempting 350,000 more low-income Ohioans from paying the income tax at all. But several groups say those numbers can be misleading when you consider the hikes Kasich is proposing on other taxes.

Tax shifting?
The plan would increase the sales tax rate by half a percent, from 5.75 to 6.25 percent, an increase of nearly 9 percent. And that sales tax would also broaden to apply to more services.

Zack Schiller with the left-leaning Policy Matters Ohio says that cutting the income tax doesn’t do any good for low- and middle-income Ohioans if the tax burden is redirected.

“I see it as a clever selling device that doesn’t speak to the real facts. And the real facts are that for most low-income people, the major taxes that they pay, state and local taxes, are not income tax. They’re sales tax, They’re gasoline tax; they’re property taxes,” Schiller said.

Ohio House and Senate leaders will mull over that sales-tax increase as well as proposals to hike the tax on beer, wine and oil and natural gas drilling. These are all tax changes that Kasich has pushed for in the past.

While Republican Senate President Larry Obhof of Medina says his caucus is ready to consider any of these proposals, he’s not a fan of what he calls tax shifting.

“If we’re taking money out of your left pocket to put it in your right without any real net benefit, that’s something that we’d have to discuss as a caucus over the next six months. But I think that’s not going to be as well received,” he said.

There is one change that Kasich proposed that Obhof seemed to get behind right away. He and other senators have been working on simplifying Ohio’s tax brackets, and Kasich’s plan would cut the number of brackets from nine to five and bring a flatter rate. Obhof says these kinds of changes are appealing to businesses that are looking to move to a new state.

Smoking and taxes
Kasich had suggested a dollar a pack increase on cigarettes in his last budget. Lawmakers dropped that to a 35 cent increase.

This time, Kasich has proposed increasing the tax on cigarettes by 65 cents. That’s getting support from some groups including the American Cancer Society. But the group’s Jeff Stephens says they were hoping Kasich would hike that tax up by a dollar.

“Sixty-five cents isn’t quite enough to have a health impact. The tobacco industry spends $450 million a year here in just Ohio, over a million dollars a day marketing their product, and about 75 to 80 percent of that goes towards price discounting. So ...that’s why the tax increase has to be high,” Stephens said.

The budget plan now goes to the Ohio House, where it will begin the committee process. It needs to be signed by the end of June.