Innovation Ohio Budget Briefing

Initial thoughts from Innovation Ohio President Keary McCarthy on yesterday’s state budget proposal.

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Budget Proposal Favors Those At The Top, But Leaves More And More Ohioans Behind

  • Tax shift hasn’t worked. Since 2005, Ohio has repeatedly tried shifting taxes from the wealthy to everyone else in hopes of creating jobs. We have over 80,000 fewer jobs than we did a decade ago, meanwhile poverty is up and median income has fallen.
  • From one pocket to another. The proposed budget raises taxes on working Ohioans and businesses by $5.2 billion, to pay for a $5.7 billion income-tax cut that largely benefits those at the top.
  • Those who can afford it the least pay more. Decreasing Ohio’s progressive income tax and increasing the regressive sales tax means that those who can afford it the least now have to pay more.

Tax Shift Doesn’t Make Sense For Job Creators Or Middle-Class Families

  • This tax shift doesn’t make sense. Increasing taxes by 20 percent on companies who create jobs to pay for tax cuts on businesses who are often sole proprietors and pass-through entities doesn’t make sense for middle-class Ohioans or our economy.
  • Middle-class is being left behind. The budget goes out of its way to cut taxes for those at the very top, but does very little to strengthen middle-class families. The modest increase in the amount a family can claim as an exemption, pales in comparison to rising sales tax costs and continued property tax squeeze.

Support For Schools Doesn’t Pass The Grade

  • These aren’t the increases you’re looking for. The proposed budget claims to increase funding to schools by $700 million, but the total amount is likely to be much less thanks to a loss of $235 million in reimbursements for funding in the phase out of the Tangible Personal Property Tax (TPP).
  • Some school districts will see cuts. More than half of Ohio school districts will see funding cuts thanks to proposed changes to Ohio’s funding formula (namely the reduction of a guarantee against funding losses and the elimination of the TPP reimbursement), while funding for charter schools is likely to increase.
  • Continuing to underfund our most valuable assets – our students. Education funding remains near 2010 funding levels and is historically low as an overall share of the state budget. Education spending as a share of the GRF budget is now at its lowest point since 1997, the year the Ohio Supreme Court ruled that our schools funding system was unconstitutional.

“Ohio Gov. John Kasich’s budget plan to decrease income taxes by 23 percent while tacking an additional half-cent onto the state sales tax would deliver a few hundred dollars in tax savings to many Ohio families. But the savings would be less for poorer families since they pay little income tax and spend a larger percentage of their income on sales taxes than more-fortunate Ohioans.”

 – The Dispatch, Feb 3, 2015: Kasich budget includes $2.5 billion sales-tax hike