Ohio Senate’s Budget Includes Small Business Tax Cut

Senate lawmakers on Tuesday unveiled their revamped version of Ohio’s two-year budget, resurrecting Gov. John Kasich’s $1.4 billion tax cut for small-business owners.

But — like the versions the House and Kasich rolled out earlier this year — everything is subject to change.

Senators reintroduced the 50 percent tax cut for small-business owners Kasich proposed in February when he unveiled his “Jobs Budget 2.0.” They tossed the House proposal for a permanent 7 percent income tax cut for all Ohioans.

Aside from the business tax cut, the Senate’s version of House Bill 59 keeps off the table much of what the House scrapped from the Republican governor’s proposal. Both chambers are under GOP leadership.

Senate President Keith Faber said favoring a tax cut for small-business owners over a cut for all Ohioans is a means to job creation.

“While we all support a 7 percent across-the-board income tax cut, we just did a 4.5 percent across-the-board income tax cut,” said Faber, a Celina Republican. “While I’m sure it helped at the margins, the reality is we want to do something that’s targeted to those 95 percent who are creators of the jobs.

“We believe the small-business tax cut will directly grow jobs in the immediate future.”

The 50 percent small-business tax cut would apply to the first $750,000 in yearly income claimed on personal tax filings, so a business owner earning $750,000 would only be taxed on the first $375,000.

Democratic Sen. Michael Skindell said the break given to small business owners won’t spur job creation.

“The revenue generated from that doesn’t really get a lot of small businesses to hire people,” said Skindell of Lakewood. “The statement that this will create jobs is somewhat false.”

Kasich’s version of the budget called for sweeping tax reform, which included a 20 percent phased-in income tax cut, a broadening of the sales-tax base and a reduction in the sales tax from 5.5 percent to 5 percent. The governor also wanted to hike severance taxes to draw more money from large oil and gas drillers.

“We continue to look at tax reform beyond what we’re doing as a small-business tax cut,” Faber said. “The severance tax produced by the governor is not likely to be in this budget.”

Medicaid expansion and the state’s school funding formula are not included in this latest iteration of the budget to give lawmakers more time to iron out those issues, Faber said.

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