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Big Tax Cuts And A Sales Tax Hike In New Budget Plan

Ohio lawmakers have come to an agreement on a new tax reform plan that they say is fair and will help all Ohioans. The plan will provide income tax breaks to nearly all Ohioans but will raise some taxes and shift some tax burdens. Republican Senate President Keith Faber says the tax plan Senators and House member have agreed upon is fair to all Ohioans and accomplishes a major goal. "The number one thing that this plan does that former plans have not – this is sustainable, it is balanced and it does not rely on one time money," says Faber. Faber says this plan provides tax relief to nearly all Ohioans. "For the next three years, every Ohioan will see at least a 10 percent cut in their income taxes. Included in the income tax cut is an earned income tax credit, something we’ve heard a lot from our friends on the other side of the aisle. We’re also including a tax plan that includes a 50% tax cut on Ohio’s small business owners who create most of the jobs in this state," says Faber. Faber says the 50% tax cut would be applied to the first $250,000 of income generated by small businesses. And he says that would cover 98 percent of Ohio’s small businesses. To give these income tax breaks, the state would raise sales taxes across the board from 5.5 to 5.75 percent. And the state would tax things like electronic books that are not currently taxed and raise taxes on tobacco products that are not taxed at the level of cigarettes. The state would also eliminate an income tax break for gambling losses. Republican State Senator Scott Oelslager says there’s a big reason to make these reforms. "The key to this proposal is to make Ohio the most attractive place in the nation for job growth and job creation for middle class Ohioans," says Oelslager. One major change in this plan affects the homestead tax break…the property tax break that’s now given to all seniors. It the future, that break would be given based on income so that only low income Ohio senior citizens would get it. Ohio House Finance Chair Ron Amstutz says there would be a change in the formula for future property tax levies. "We are leaving existing levies that might be renewed stable so they won’t be touched by this. But in the case of new levies or a replacement levy which is the form of a new levy, there would not be a 10 percent or a 2 1/2 percent rollback for those istuations going forward," says Amstutz. The plan is drawing praise from business groups and Republicans but criticism from Democrats. Stephen Dyer is the Education Policy Fellow at the left leaning think tank, Innovation Ohio. "This pretty much solidifies the fact that this state has pretty much forsaken its responsibility for our kids. It is difficult to understand how you are going to have a constitutional school funding system with $2.7 billion in the state’s coffers," says Dyer. Dyer says he thinks lawmakers have the wrong priorities. "There are just lots of real problems with this plan but the fundamental problem is it seems like the most important thing that Ohio legislators have to deal with is figuring out how to cut taxes and they don’t feel like they have as much responsibility to constitutionally fund our schools," says Dyer. Dyer says it’s one thing to cut taxes when times are good but he says there when not now. He says lawmakers should have at least restored funding for schools back to the level it was three years ago. For his part, Senate president Faber is ready for that criticism. "I would say that we just in this budget are increasing K-12 funding by 11 percent. And I would think a lot of local taxpayers and property tax payers think that levies should not be easier to pass. And from that perspective, we frankly want you to be able to operate within your means so that’s part of that message," says Faber.