In Washington, President Obama and Congressional Democrats secured a historic fiscal victory in early January. By finally passing legislation that asked the wealthiest Americans to pay a little more in taxes, lawmakers moved one step closer to securing our nation’s fiscal health.
At the state level though, Republican Governors from around the country are pushing for tax reforms that would do the exact opposite. These governors want to see income taxes reduced or eliminated while raising other more regressive taxes that harm low- and middle-income taxpayers. These pieces of legislation are taken straight from the radical conservative playbook in an effort to transfer the burden of paying for public services from the wealthiest to the less well off. The Republican argument is that if a state lowers their income tax rate it will become more competitive in the eye of businesses who may want to relocate there or to help attract high-skilled workers.
For example, according to a recent New York Times article, Kansas Republican Gov. Sam Brownback introduced legislation to phase out the state’s income tax by cutting services and keeping in place what was meant to be a temporary increase in the state’s sales tax. Republican lawmakers in Kansas said that individuals were leaving the state to move to states that do not have income taxes and that this legislation would make them more competitive.
In reality, recent evidence points to the fact that there is no correlation between a state income tax rate and economic growth. What is worse is that these policies are simply another gift to the rich at the expense of low- and middle-income workers.
When states shift to relying more on regressive taxes, like sales taxes, they are in effect raising tax rates on low and middle-income workers while reducing taxes on the wealthiest. Why? Because state sales taxes are more regressive – lower-income families spend a greater percentage of their income than wealthier people on paying these types of taxes. This is the opposite of progressive taxes like the income tax that requires people who make more to pay more.
Will Ohio be one of these states soon? We will probably learn the answer to that question in the next week when Gov. John Kasich introduces his next two-year operating budget. Kasich already proposed legislation reducing the state’s income tax that failed to become law last year and it is very likely that his next budget will once again contain a proposal to reduce or eliminate the tax.
The next few months will be crucial in determining whether Ohio will continue to ask the richest to pay their fair share or whether the burden is shifted to the less well off. If lawmakers choose the latter, their policies will rightfully be seen as another give away to the wealthiest Ohioans at the expense of the poor and middle-class.
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