Homeowners, small businesses and low-income Ohioans to fund new GOP tax plan

According to the Columbus Dispatch, GOP leaders will today unveil a new tax plan that preserves the $1.4 billion cut in taxes for business owners and investors, but adds an income tax cut, paid for by increasing sales taxes, taxing more small businesses and eliminating tax relief for homeowners.

In order to pay for an 8% across-the-board reduction in Ohio’s income tax –  a cut that will disproportionately help the wealthy – the plan to be rolled out this afternoon would:

  • raise the sales tax by 0.25%
  • expand the pool of businesses subject to the state’s commercial activity tax (by lowering from $1 million to $500,000 the amount of revenue a business can have before they pay the tax)
  • eliminate the state’s 12.5% contribution to property taxes for future levies

Since the 1970s, the state of Ohio, in an effort to lower property tax bills, has reimbursed counties and schools in order to provide a 10% break on property taxes, and another 2.5% benefit for owner-occupied properties. State support for these two programs amounted to over $1.3 billion in 2012 alone.

Here’s a chart showing how much each county receives from the tax rollback.

According to the Dispatch, the state would stop providing this support for future levies, which may be defined to include renewals of current levies. It could also mean local taxpayers will pick up the full tab for any new levies vs. the 87.5% they are currently paying.

That means less state support for schools, despite claims made just last week by Senate leaders that they were investing in schools. And schools aren’t alone. Under the plan, the state will lessen its support for libraries, health districts, mental health, senior services and an array of other services supported by property taxes. And taxpayers will be left to make up the difference, or services will be reduced. It’s another massive tax shift to local taxpayers so state officials can claim to cut taxes.

Raising the sales tax hits low-income Ohioans hardest. The poor pay the highest share of their incomes in sales taxes – 7% of the incomes of the lowest fifth of Ohio income-earners, compared to just 1% paid by the wealthiest 1%.

A hearing on the new plan will be held tomorrow, just hours after most Ohioans will read about it in their newspaper, with a final version of the budget expected early next week.