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· September 12, 2013

IO Op-Ed: Tired of tax reform that doesn’t help?

The following op-ed ran in yesterday’s edition of the Elyria Chronicle-Telegram: — On Thursday, the Ohio House Tax Reform Study Committee will hold a public hearing in North Ridgeville. It seems the honorables want to hear any ideas you or your neighbors might have for future “tax reform.” To quote Brad Pitt in the movie “Inglourious Basterds,” I hope you’ll oblige them. But first, let’s review their most recent “reforms.” Ohio’s new biennial budget contains five of them. The first is a 10 percent across-the-board income tax cut. The second is a 4.5 percent increase in the state sales tax. Third, there’s a 50 percent tax cut for business. The fourth reduces the number of seniors eligible to claim the “homestead exemption” on their property taxes. And the fifth will hike the cost of future local levies by 12.5 percent. Perhaps you’ve detected a pattern. Taken together, these five “reforms” shift Ohio’s tax burden away from the rich and put it squarely on the rest. Take the income and sales tax reforms. The Cleveland-based think tank Policy Matters Ohio crunched the numbers and found that on average, the richest 1 percent will net a yearly tax cut of $6,000. Middle class taxpayers earning $51,000 will see a whopping cut of 9 bucks. And some of the poorest Ohioans will actually see their taxes go up. It gets worse. To pay for these tax cuts that disproportionately benefit the wealthy, Republicans (who control both houses of the Legislature as well as the governor’s office) opted to “means test” the homestead exemption (which allows seniors to reduce the taxable value of their homes by $25,000) and end the state’s 42-year commitment to defray the cost of local levies. Beginning in November, levies for schools, public safety or other local government services will cost taxpayers 12½ percent more. The fifth and final “reform” is a 50 percent cut in taxes for certain business owners, which Gov. John Kasich and Senate President Keith Faber have claimed will help small business “big time” and create jobs in the “immediate future.” But an analysis by The Plain Dealer found that 80 percent of Ohio’s businesses will get just $372 per year, and no business will receive enough from their tax cut to hire even one minimum wage worker. Of course, a small minority of business filers – the top 1 percent again – will rake in over $7,000 a year. Unfortunately, many of them are either one-person shops (like lawyers or hedge fund managers) who don’t want or need to hire additional workers, or passive investors in out-of-state companies who have no influence over hiring decisions. If tax policies like these aren’t your idea of “reform,” you may want to raise a few questions at the hearing. First, you might inquire why the Ohio tax code still contains about $7 billion in special interest loopholes – and why, before they increased your property taxes, legislators refused to close them. In fact, Republicans even rejected a proposal to periodically review those loopholes. Some are doubtlessly worthwhile. But do owners of private jet aircraft really need a tax break? How about beer manufactures who pay their taxes a little early? Surely somewhere in that $7 billion there’s room for a little reform. You also may want to ask why – if the goal is job creation – Republicans don’t enact tax cuts that mostly benefit the middle class. History shows new jobs don’t come from cutting taxes for rich people. They come from rising consumer demand. No company, large or small, will create jobs unless it believes its customers will buy enough goods and services to cover the cost of those new workers. If middle- and low-income people have more money in their pockets, they’ll spend it buying the cars, refrigerators and washing machines necessary to get our economy humming again. Wealthy people, by definition, already can afford to buy everything they need or want. Finally, I’m sure you’ll want to thank the House Tax Reform Study Committee for soliciting your views. But you may want to ask why – if it is truly interested in what you think – it chose to eliminate the property tax rollback with no hearings, no debate and no public testimony. In the future, maybe it should ask what you think about its so-called “reforms” before they’re enacted. Dale Butland is communications director for Innovation Ohio, a progressive think tank headquartered in Columbus.

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Tagged in these Policy Areas: Ohio State Budget