Local state legislators were still reviewing details of a new 719-page state budget this week, but said they believe items like a proposed income tax cut and overhauls to social services puts Ohio on the right path.
The budget proposed by Ohio Gov. John Kasich would raise the state sales tax rate to 6.25 percent, boost taxes on cigarettes and fracking activity and cut income tax rates by 23 percent over the next few years, among other plans. Republicans said the proposal will provide help to most Ohioans and provided a needed overhaul of social services. But opponents argued cutting Ohio’s income tax mostly benefits the state’s wealthiest residents.
“The folks of Ohio are going to find if they’re struggling or lower income or middle class, they’re going to find an awful lot of help in his budget as it’s been proposed,” said Ohio Rep. Kyle Koehler, R-Springfield. “Obviously the House and the Senate are going to have a lot to say about how it finally ends up looking.”
Kasich’s two-year budget would shift the tax burden in the state by slashing income taxes 23 percent over two years and providing what the administration says is a $500 million net tax cut for residents. To offset the lost revenue, the state would boost Ohio’s sales tax from 5.75 to 6.25 percent, and increase cigarette taxes. The state would also increase the Commercial Activities Tax, which taxes a business’ gross receipts.
Despite arguments the budget is meant to help lower-income residents, income tax cuts typically benefit Ohio’s wealthiest residents, said Dale Henry, chairman of the Clark County Democratic Party.
“It seems like he’s making claims that he wants to help Ohioans out of poverty,” Henry said of Kasich’s proposal. “But his spending plan seems to be putting more money into the pockets of the wealthy folks.”
One of the most important proposals in Kasich’s budget is a plan to overhaul social services, said Ohio Rep. Bob Hackett, R-London.
Kasich has said his budget would provide more funding for developmentally disabled residents and encourage more coordination at the Ohio Department of Job and Family Services to residents can visit fewer offices for assistance.
Kasich’s proposals for tax reform will also help move the state a step closer to eventually eliminating Ohio’s income tax someday.
“If there are some net increases it’s probably going to be in the upper income area,” Hackett said of proposals like increasing the CAT tax.
House members will read through the budget over the next several days, Koehler said. One issue of concern is the budget simply shifts the tax base, while some House members want to see cuts with no increases elsewhere, he said.
“One of the concerns we have is tax shifting,” Koehler said. “We’d like to see taxes come down without raising taxes in other areas.”
The budget will be debated in the House, which will make changes and pass its version to the Ohio Senate for further review.