Lawmakers, Policy Advocates React To Kasich's "Tax Shifting"

Jan 31, 2017

State lawmakers and policy advocates are sounding off in response to Gov. John Kasich’s proposal to cut income taxes while increasing other taxes to pay for those tax cuts. 

Kasich is touting his last budget plan as one that cuts income taxes by 17% while exempting 350,000 more low income Ohioans from even paying an income tax.

But several groups say those numbers can be misleading when you consider the shift Kasich is proposing on other taxes.

The plan would increase the sales tax rate by half a percent, from 5.75% to 6.25% - which is an increase of nearly 9%. And that sales tax would also broaden to apply to more services.

Zack Schiller with the left-leaning Policy Matters Ohio counters that cutting the income tax doesn’t do any good for low and middle income Ohioans if the tax burden is redirected.

“I see it as a clever selling device that doesn’t speak to the real facts and the real facts are that for most low-income people the major taxes that they pay, state and local taxes, are not income tax they’re sales tax, they’re gasoline tax, they’re property taxes,” Schiller said.

Ohio House and Senate leaders will mull over that sales tax increase as well as proposals to hike the tax on beer, wine and oil and natural gas drilling.

These are all tax changes that Kasich has pushed for in the past. While Republican Senate President Larry Obhof of Medina says his caucus is ready to consider any of these proposals, he’s not a fan of what he calls tax shifting.

“If we’re taking money out of your left pocket to put it in your right without any real net benefit that’s something that we’d have to discuss as a caucus over the next six months but I think that’s not going to be as well received,” said Obhof.

There is one change that Kasich proposed that Obhof seemed to get behind right away. He and other senators have been working on simplifying Ohio’s tax brackets, and Kasich’s plan would cut the amount of brackets from nine to five and bring a flatter rate. Obhof says these kinds of changes are appealing to businesses that are looking to move to a new state.

Kasich had suggested a dollar a pack increase on cigarettes in his last budget. Lawmakers dropped that to a 35 cent increase. This time, Kasich has proposed increasing the tax on cigarettes by 65 cents. That’s getting support from some groups including the American Cancer Society. But the group’s Jeff Stephens says they were hoping Kasich would hike that tax up by a dollar.

“Sixty-five cents isn’t quite enough to have a health impact. The tobacco industry spend $450 million a year here in just Ohio, over a million dollars a day marketing their product, and about 75 to 80% of that goes towards price discounting. So the industry mitigates that so that’s why the price increase the tax increase has to be high,” said Stephens.

The budget plan now goes to the Ohio House where it will begin the committee process. It needs to be signed by the end of June.