Gov. John Kasich has proposed cutting Ohio’s income tax rates by about 8.5 percent across all brackets, using tax increases on cigarettes, oil and gas resources and business receipts to pay for it.
The cuts are proposed in the governor’s mid-biennium review (MBR), a policy statement used to update last year’s budget legislation and lay out the administration’s goals for the year.
It is contained in more than 1,600 pages of legislation introduced Tuesday by Republican Rep. Jeff McClain of Upper Sandusky. An overview of the proposal also is available online.
The broad piece of legislation includes policy proposals for K-12 education, two-year and four-year colleges, jobs training, veterans benefits and programs addressing substance abuse and mental illness. Many of the proposals were outlined in Kasich’s State of the State address last month in Medina.
“We know what works: balanced budgets, tax cuts, better education and training, and a helping hand so everyone can benefit from a stronger Ohio. We’ve got to keep building on these ideas because they’re lifting our state, and with the continued partnership of the Legislature we’ll keep that progress going for Ohioans,” Kasich said in a statement.
In that address and elsewhere, Kasich had stated his goal was to get the top income tax rate below 5 percent. The MBR proposal accomplishes that. The top rate would be reduced to 4.88 percent.
Cuyahoga County Executive Ed FitzGerald, Kasich’s likely opponent in the November gubernatorial election, criticized the governor’s proposal as another round of tax cuts for the wealthy.
“As Governor, I will focus on growing our economy from the middle out, rather than top-down,” FitzGerald said in a statement released by his campaign. “One of my first actions will be to reinstate the Homestead Exemption. Ohio’s seniors and most vulnerable should not have to pay for John Kasich’s giveaways to the very well off.”
The FitzGerald campaign, meanwhile, had pizzas delivered to reporters across the state in an attempt to illustrate that tax savings under Kasich’s plan would not be large for middle-class families.
“John Kasich’s income tax cut plan only amounts to a couple of pizzas for middle-class families,” the campaign said. “However, if you fall within the top one percent, his tax cut could fund a round trip to Rome to eat pizza under the Colosseum.”
The administration counters that the savings will be much greater once new proposed cuts have taken effect. The MBR proposals would be phased in over three years, beginning with this year’s wages (filed in next year’s tax returns).
It estimates that the income tax bill for a household with a $60,000 (married filing jointly) and two children will have declined by more than $280.00 a year by the end of 2016, as compared to 2011, Kasich’s first year in office. For a single parent with one child who can also claim the state’s earned income tax credit, the savings would be nearly $360, the administration said.
To pay for the tax cuts, the administration proposes raising taxes in three areas — tobacco products, natural resource drilling and business receipts.
The tax on a pack of cigarettes would increase from $1.25 to $1.85. There also would be an increase in the taxes on other tobacco products, as well as taxes attached to e-cigarettes.
A severance tax of 2.75 percent would be levied on the gross receipts of oil and gas producers who are engaged in horizontal drilling. The tax targets extractions from the resource-rich Utica Shale formations in Eastern Ohio.
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