The Kasich administration’s proposed expansion of the state’s sales tax to services as well as goods is not a new idea. Several states have been down this road recently, including Ohio. The results of those efforts have been consistent: taxing services is so unpopular — both among consumers and businesses — that every attempt in the past four decades has been undone before taking effect or shortly thereafter.
We looked at three such examples.
Stiff opposition from both business and taxpayers met each instance of sales tax expansion.
The Kasich administration, however, proceeds undaunted, perhaps because it needs the extra revenue the tax will generate to pay for an income tax cut that will disproportionately benefit Ohio’s wealthiest citizens. Indeed, the administration’s plan would save Ohio’s top 1 percent of wage earners more than $10,000, but would actually increase taxes on the bottom 60 percent of Ohioans.
Despite this disparity, only time will tell if the administration’s proposal will confront resistance similar to that faced by the states that preceded it.