For Immediate Release: June 22, 2011
Contact: Dale Butland, 614-783-5833
Columbus—Innovation Ohio, a progressive think tank headquartered in Columbus, said today that Gov. Kasich’s proposal to allow investors to escape taxation on the capital gains from certain investments is “a half-baked idea that not only favors the rich, but also is likely to cost Ohio tens of millions of dollars in revenue.”
News reports indicate that the governor is asking Republican legislators to insert a so-called “Invest Ohio” provision into the FY 2012-13 budget bill. Though details are sketchy, the plan apparently would allow investors to pay no state taxes on any capital gains derived from investments in Ohio-based companies that are held for at least two years. Additionally, investors who sell shares of stock they already own and invest the resulting capital gains in an Ohio based company—and hold that investment for at least two years—would receive a “refundable tax credit” from the state.
“Refundable” means that an investor who owes no tax on the original stock sale would receive a check from the state equal to the value of the “credit.” An investor owing a tax amount less than the value of the credit would receive a check equal to the difference.
Said IO Communications Director Dale Butland:
“There’s nothing wrong with encouraging investment in Ohio companies. But at a time when middle class families are being asked for enormous sacrifice, there’s a great deal wrong with not only exempting the richest Ohioans from any sacrifice whatsoever, but giving them yet another tax cut on top of it.
“A separate bill that is already pending—HB 134—would reduce , but not completely eliminate, taxes on capital gains derived from investments in Ohio companies. According to the non-partisan Legislative Services Committee (LSC), that bill would ‘reduce… income tax revenues by tens of millions of dollars or possibly more’. So it is safe to assume that the Kasich plan, which goes even further than HB 134, would cost Ohio even more. And how would Gov. Kasich and his legislative allies make up for this lost revenue? Presumably, by making even deeper cuts to the programs on which poor and middle class Ohioans depend. In other words, Invest Ohio is likely to help the rich and penalize the rest.
“Equally outrageous is that nobody knows exactly what Invest Ohio would cost, what it would accomplish or how the Department of Taxation is supposed to verify either that the requisite investments were made or, in the case of mutual funds which invest in both Ohio and non-Ohio companies, how much capital gain would be exempt from taxation.
Neither the Dept. of Taxation nor the LSC has studied this proposal. There is no hard evidence whatsoever, either about Invest Ohio’s fiscal impact or the number of jobs, if any, it is likely to create. Gov. Kasich has simply thrown it into the mix at the 11th hour, just days before the General Assembly meets in conference committee to iron out differences between the House and Senate versions of the budget bill. But “Invest Ohio” isn’t in either version of the bill. It’s a completely new proposal that has had no hearings, no debate, no analysis by the LSC, no nothing. Making policy and deals in smoke-filled back rooms isn’t democracy, and it isn’t good for Ohio.”