Last week, Governor John Kasich announced that nearly $1 billion was being added to Ohio’s “Rainy Day” Fund, which sets aside money for times of economic hardship. Compared to three years ago when the fund contained just 89 cents, the fact that Ohio now has $1.48 billion in reserve is good news for taxpayers all over the state.
That announcement came on the heels of the state operating budget being signed into law at the end of June. The budget bill included several tax reforms, including a $2.7 billion net income tax cut for individuals and small businesses over the next three years.
For businesses, in particular, their taxable income will be reduced by 50 percent on their first $250,000. Improving competitiveness and expanding the jobs market is a critical part of our effort to continue the momentum Ohio has achieved in recent years. This budget frees up more than $1.6 billion for small businesses to meet those goals.
I also believe the budget moves Ohio in a positive direction as far as the kind of the tax system that we want to have in our state. While the state sales tax is going up by one quarter of one percent—or by 25 cents on every $100 of spending—when teamed with the income tax reforms, Ohioans will still be experiencing a net tax reduction.
What a sales tax does is allow people more flexibility on the taxes they pay because it is directly tied to their spending behavior. Whereas the income tax essentially takes money out people’s pockets based on the amount of hard work they put in, a consumption-based tax system rewards savings and fiscal responsibility.
Finally, some critics have made false accusations and assumptions about the bill, especially regarding the property tax provisions. This budget both makes the property tax code simpler and more transparent by eliminating a policy in which the state picked up 12.5 percent of a person’s property taxes imposed by local levies. That is usually where the critics end their story.
However, because all government money is taxpayer money, the 12.5-percent “pick-up” by the state simply used other people’s tax dollars to subsidize property owners. Even senior citizens and low-income Ohioans who don’t own property had to pay more for people who did own property. By eliminating this policy, property owners will pay their entire property tax bill, but enjoy lower income taxes.
Ohioans created 170,000 private sector jobs since January 2011, and I believe the two budgets passed in that time have built off of each other to foster an environment that will attract more businesses, create more jobs and inspire young people to raise a family here in Ohio.
