Notes: We need to rethink the 2005 tax changes and evaluate what is working and what is not. Income tax cuts have not created the promised jobs or increased resources for low and middle income Ohioans. Ohio has fewer resources to invest in our communities and many Ohioans are actually paying more in taxes. It is time to get Ohio back on track.
Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
The state of Missouri will have the opportunity to vote on a sales tax increase to specifically fund infrastructure. I do not know all of the in’s and out’s of Missouri budget and transportation policy, but many of the issues in Missouri and similar to those across the nation.
1. Gas Tax Revenue:
The gas tax just hasn’t kept pace with the cost of infrastructure. Cars need less fuel, and therefore pay less tax on fuel, and this leads to less revenue to maintain those same roads and bridges. Do states need to raise gas taxes to account for more fuel efficient cars?
2. Alternative transportation:
States have invested heavily in roads designed for cars and must invest heavily into maintenance of these roads. Should states and localities look at new investments that may impose a high upfront cost but lower maintenance costs down the road?
3. Who Pays?
Families struggling to get by pay a larger share of their income toward sales taxes than the wealthy pay. Will sales tax increases be the right way to fund infrastructure or should revenue from a higher gas tax be mixed with income tax revenues to finance these projects?
4. We need Roads
A good road is the foundation of a strong economy. We need reliable bridges in our country, states, and local communities to keep people safe and allow commerce to flow freely.
The question is, which road will Missouri take next Tuesday?
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I,
I took the one less traveled by,
And that has made all the difference.
– Robert Frost
Probably not, because most Ohioans don’t realize that we are required to submit Ohio Use Tax (see line 19) on items purchased online where the seller doesn’t collect. That means every time you buy a book, an i-phone case with a built-in cup holder, or an emergency mustache kit and sales tax is not collected – you are legally responsible to pay it when you file your state income tax returns.
And that makes sense….
because there is no difference between ordering a book on Amazon or walking down to the Book Loft and purchasing it off of their shelf – except the Book Loft collects sales taxes. (and they create jobs here in Ohio…) If we want Amazon to collect the sales tax owed on our order we need Congress to act.
Why is it this way?
Simply put, Ohio can’t tax companies in other states. Congress has the authority to regulate commerce between the states. Therefore, we need Congress to resolve this issue with the Marketplace Fairness Act. It is the Constitutional thing to do.
As more people use Amazon to purchase their books, local and state governments are losing revenue they need. This will lead to cuts in public services OR an increase in other taxes – likely a combination of both. Sales tax is collected by the state, county, and other entities (like a regional transportation service). All of these levels of government will struggle to continue to provide great public services that we all use.
Anti-tax organizations are afraid this is an ‘expansion of state tax authority‘ but it isn’t really. It is an effort to make the collection and remission of taxes already owed more efficient and equal among the several states. We can all get behind real efficiency, can’t we?
News: As Ohio Expands Tax Cuts, the Poor get Poorer, Cleveland Plain Dealer
Notes: “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.” READ MORE
News: Tilt of the Governor, Akron Beacon Journal
Notes: The Governor signed another tax cut last week costing the state over $400 million. 50% of the cut will go to the wealthiest 5% of Ohioans.
News: Ohio’s Economic Recovery, Not a Simple Tale, Columbus Dispatch
Notes: The national recession and recovery have more to do with Ohio’s economy than state level decisions. Tax cuts simply have not worked in improving Ohio’s economy. In fact, Ohio is lagging much of the nation. The simple reality is that governor’s have the most impact in creating great public services that will be the foundation of a strong economy into the future. Investments into reliable infrastructure, schools, and public safety are prudent ways to grow an economy over the long term.
News: Wages flat in Ohio, decline locally, state job growth below national average, Cleveland Plain Dealer
Notes: The unemployment rate does not reflect Ohio’s unemployment picture for Ohioans. Ohio’s unemployment rate is dropping because too many people have been unemployed for so long that we stop counting them. Job growth is slow and far too many new jobs are part-time and low wage. This will continue to drag the rest of Ohio’s economy downward.
Ohio Continues a trend – Cut taxes for the wealthy and not investing enough in our communities.
On Monday June 16th, Governor Kasich signed HB 483 also known as the Mid-Biennium Review (MBR). This legislation continues a decade long trend that prioritizes tax cuts for the wealthiest Ohioans. The bill cuts taxes in by about $400 million over the next 12 months (July 2015 – June 2016). Over $200 million of this cut (50%) will go to the wealthiest 5% of Ohioans. The poorest Ohioans will probably not receive any of this.
Tax cuts just don’t work.
The tax changes include an increase to a tax credit for some business owners – that has no evidence showing it is effective at creating jobs. We need to review tax breaks and loopholes and keep the ones that work, and get rid of the ones that don’t.
Tax cuts continue to benefit the wealthy the most.
The bill cuts Ohio’s income tax by 1% (reducing the top marginal tax bracket 5.39% down to 5.33% in 2014 instead of 2015). The top 1% will pay an average of $400 less in income taxes – while those in the middle will only save $8 a year. We need the wealthiest Ohioans to pay their fair share – the more we cut the income tax, the father we get from that goal.
Some Good? Maybe. – put it’s really small.
The bill does provide a larger tax credit for those who make less than $80,000 a year and an expanded Earned Income Tax Credit (EITC). However, the EITC remains non-refundable – excluding those Ohioans most in need. These two changes will put about $2 a month into middle income Ohioans pockets. While signs of a positive step, these changes fall short of helping many Ohioans.
Most importantly – we are not investing in our communities!
$400 million is a substantial amount of revenue that could be invested into affordable housing, social services, K-12 education, reducing college tuition, or building alternative transportation options. While the bill did invest $36 million into expanding some social service programs – close to $500 million was requested by multiple advocacy organizations asking for resources to meet the current need.
The Ohio legislature passed HB483 on Wednesday, June 4th, approving $400 million in tax cuts. The tax cuts benefit the wealthiest Ohioans the most and drain funds needed to invest in the great public services that strengthen our communities. Dozens of individuals testified throughout the Mid-Biennium Review process on where Ohio needs to invest – adult protective services, addiction treatment, housing, children services, local governments, infrastructure, food security, education, prison security and much more.
A QUICK SUMMARY OF THE TAX CUTS:
Pass Through Entity Tax Cut: Ohio has no corporate income tax, but some business owners – such as lawyers and accountants in private practice – claim their business income on their personal income tax returns. These individuals are exempt from paying tax on their first 75% of income (up from 50% in HB59).
The Problem: This tax cut is intended to spur job creation – but businesses expand business based on consumer demand, not tax cuts. This will re-direct $290 million into the pockets of mostly wealthy individuals who have no intent to hire new people.
Income Tax Cut: HB59 (June 2013) included a 10% income tax cut phased in over 3 years – with the final phase in coming in 2015. HB 483 speeds up the tax cut to all go into effect in 2014.
The Problem: The original tax cut was based on a theory that tax cuts lead to jobs – despite research and evidence to the contrary. This will provide nearly $100 million primarily for the wealthiest Ohioans.
EITC: The bill expands Ohio’s Earned Income Tax Credit from 5% of the federal level to 10% of the federal – a step in the right direction.
The Problem: While this is a step in the right direction, an EITC is most effective when it is refundable. Without refundability of the credit, many will not benefit from this policy. This will provide only $17 million for low and middle income Ohioans.
Personal Exemption: The personal exemption amounts will be increased for individuals making less than $80,000 a year. This policy will reduce the tax load for middle income Ohioans by about $73 million a year.
The Problem: It is important to make Ohio’s tax system less regressive and credits and exemptions for low and middle income Ohioans is an important step. However, this overall plan will only provide about $36 or $3 a month to middle class families.
Tax cuts just haven’t worked in Ohio – we need to invest in the foundation of a strong economy – great schools, reliable roads and infrastructure, and safe communities.
News: Bad Budget Business, Toledo Blade
Notes: The typical middle class household will pay $24 less next year in taxes as a result of an 11th hour budget deal. For this $2 a month, we will not invest over $400 million into our schools, public safety, or our community parks. A few more teachers in classrooms, or an extra police officer on our street are just some of the sacrifices we make to finance a tax cut for the wealthiest 1% of Ohioans who will receive over $1,800 a year.
News: More Millions, Akron Beacon Journal
Notes: A summary of continuing a failed tax cut strategy. Simply put, tax cuts just haven’t worked in Ohio. Government investments are investments in our priorities as the people of the state.
News: To Help Poor Neighbors, Ohio needs to rebuild the Safety Net, Toledo Blade
Notes: The federal government cuts programs, the state cuts programs. Fiscal responsibility does not mean forcing the ones with the fewest resources to suffer in difficult times. Fiscal responsibility means that Ohio policymakers identify ways to meet the needs of the community in a responsible manner, and not forcing the poorest Ohioans to bear the brunt of a bad economy. Asking the wealthiest Ohioans to pay their fair share to support our community is a good first step toward fiscal responsibility.
Great public services strengthen our communities, and we need the revenues to pay for them.
One Ohio Now in collaboration with Policy Matters Ohio and Innovation Ohio release an updated CutsHurtOhio.com - a website that allows residents around Ohio to see the impact of continued state budget cuts on their local schools and local government.
Ohio is investing $1.8 billion less in our communities and schools than in 2010. For a strong economy and good jobs we need reliable infrastructure, a well educated community and a good quality of life for all Ohioans, continued budget cuts take Ohio in the wrong direction.
News: Expert: Doubling Ohio’s EITC a good move but its still not enough, Public News Service
Notes: The Earned Income Tax Credit (EITC) is a tax credit that is targeted at low and middle income families. A refundable tax credit will provide people that qualify a refund. For example, if a working single mom for tax year 2014 has a tax liability for $100 but qualifies for a $200 EITC, they would have their tax liability reduced to $0 and then receive $100 back. Without a refundable credit, a person will only have a $0 tax liability and loses the remaining $100 of their credit.
News: Local elected officials to hold tour to urge restoration of local government funding, Akron Beacon Journal
Notes: Local leaders continue to struggle to meet fulfill their duties to their local communities after billions of dollars of state budget cuts. Local leaders are touring the state because the cuts have hit every corner.
News: Cities start to challenge Ohio Gov. Kasich on lost local government funds, WKSU News
Notes: There are multiple philosophies on what components we need for a strong economy. Presidents Eisenhower and Truman understood the foundation of a strong economy was strong public services. Their administrations invested into building infrastructure across this nation that was the foundation for a half century’s worth of economic prosperity. It is up to the states to maintain and continue to enhance much of that investment now – but we are allowing it crumble beneath our feet. Continued cuts to local government is a step backward, not forward.
News: Latest ‘compromise’ on raising severance tax for Ohio oil and gas drillers is more like a giveaway: editorial, Cleveland Plain Dealer
Notes: Ohio’s Senate is likely going to stall the severance tax bill and hopefully they will improve it over the summer. Otherwise, Our legislature has given a gift to the oil and gas lobby while failing to create economic security for Appalachia, create resources for those now and adequately address potential environmental concerns.
News: Ohio Senate Approves bill to expand business, income tax cuts, Plain Dealer
Notes: This bill will now go to the House for an up or down vote or to conference committee. The different components interact with each other – making the total cost of the bill $402 million. With that money, we could have restored the cuts to our K-12 schools, fund a massive expansion of Pre-K, fund all the social service funding requests, or adequately fund the third grade reading guarantee. Instead, the money will mostly go to the wealthiest Ohioans.
The estimates by the Legislative Services Commission are as follows
1. Business Tax Cut: Costs $290 million. This cut will primarily benefit sole proprietorships like wealthy attorneys or accountants who have a large amount of income from their business on their personal tax returns. Most business owners will not see much of this money.
2. Income Tax Cut: Costs $100 million. Income taxes are based on your ability to pay, and will primarily benefit the wealthiest Ohioans.
3. Personal Exemption: Costs $73 million. The expansion of the personal exemption will primarily go to middle income families.
4. EITC: Costs $17 million. Expanding the EITC, but not making it refundable is a wasted opportunity. Many low and middle income families will not be eligible for this because it is not a refundable credit.
It is important to note that these amendments were introduced into an appropriations bill on Tuesday during committee, approved and passed by the full Senate on Wednesday – without any notice that these would be included.