Republicans grabbed control of the state Senate 30 years ago this November by pledging to cut Ohio’s income tax. They, and House Republicans, have vowed the same ever since.
So, last week, no surprise, Republican Gov. John R. Kasich signed House Bill 483, a “mid-biennium review” that includes an array of tax cuts he sought, including doubling the Earned Income Tax Credit for low-income Ohioans.
Similarly, in Year One of his governorship, the legislature, at Kasich’s request, abolished Ohio’s estate tax. As PolitiFact Ohio reported at the time, the tax had only applied to “the 7 percent of (Ohio) estates valued over $338,333.”
The most spectacular recent tax-cuts came in 2005. That’s when the General Assembly passed a phased, 21 percent cut in Ohio’s income tax, signed by then-Gov. Bob Taft. That 2005 bill also created Ohio’s Commercial Activity Tax. Over time, CAT, as it’s known, replaced Ohio’s property tax on business equipment and on business inventories.
Repealing that business tax, the tangible personal property tax (or TPP), was a decades-long goal of the Statehouse’s many business lobbies. But, as The Columbus Dispatch reported last week, repealing the TPP shifted much more of Ohio’s overall property-tax burden onto Ohio homeowners and Ohio farmers. TPP repeal wasn’t exactly a bonanza for everyone.
Meanwhile, income tax data, provided by Department of Taxation research, illustrate how income taxes have dropped for Ohioans.
For 2004, the year before the legislature passed that big 21 percent state income tax cut, imagine a married Ohio couple with two children. Their annual income is $60,000. For 2004, that family paid (rounded to the nearest dollar) $1,824 in Ohio income tax.
But for 2014 — including the tax-cuts that Kasich signed last week — that same family’s income tax will be $1,242, a savings (over 10 years) of $583. If you find the right retailer, that might buy a 32GB Apple iPad Air.
Now imagine a married Ohio couple with two children with annual income of $250,000. For 2004, its Ohio income tax was $14,136. For 2014 — including the tax-cuts Kasich signed last week — its income tax will be $9,861. Over 10 years, that’s a $4,276 savings. Again, if you find the right retailer, and haggle, that might buy you seven of those iPads, maybe eight.
Given “magic of the market” twaddle and sloganeering by General Assembly drones parroting college econ lectures, tax cuts should have positioned the New Enterprise State, Ohio, for good times on Easy Street.
But Ohio didn’t get there. In 2004-05, for instance, as Ohio began chopping the state income tax by 21 percent, and handing business lobbies that sweet TPP repeal, the percentage of Ohioans in poverty was 13 percent, according to Development Services Agency data. For 2011-12, latest years given, 16.3 percent were poor.
And tax policy has consequences not just for people but also for places. Consider: The estate tax was a particular grievance of affluent Ohioans. So estate tax repeal was no skin off John Kasich’s nose, philosophically — or otherwise. When Ohio repealed the estate tax, PolitiFact said, it was providing about $60 million a year to the state — peanuts, in terms of Ohio’s budget. But to the specific city or village or township where an estate-taxed Ohioan had lived when he or she died, the tax produced, statewide, a total of $250 million. To some better off communities, that was “found money.” It’s lost money now.
So, today’s Statehouse irony: The tax cuts that give General Assembly Republicans a platform leave middle-class Ohioans treading water — and unfilled potholes in front of country clubs.