Gov. John Kasich speaks at his inauguration ceremony on Jan. 12 at the Southern Theatre in Columbus.
Credit: Jon McAllister / Asst. photo editor
Letter to the editor:
In the past three decades, Ohio has lowered the state’s income tax almost year by year, promising more jobs and growth through investments. Three decades of promises have come and gone, and we’re still here with not much to show for it, except ever-increasing sales taxes and empty promises. You might like seeing a few more dollars in your paycheck, but unless you’re making the big bucks, chances are you’ll find yourself paying more in sales tax than before.
Currently, Ohio is ranked 19th overall in combined state and local sales taxes at about 7.11 percent. Kasich’s budget proposal for 2016-17 would bump the Buckeye State’s average combined tax to 7.61 percent — this means a higher combined sales tax than 36 other states in the nation.
In the past decade, Ohio has increased sales tax 0.75 percent, and is planning again to increase it .50 percent in just two years — that’s a .25 percent increase per year versus 0.75 percent in the previous 10 years. This “tax shift” has the majority of Ohioans paying more, so the richest Buckeyes can pay less.
So why does this half a percent matter so much? With the proposed 23 percent decrease in income taxes, the $5.7 billion tax reduction needs to be made up elsewhere. By increasing sales tax, the lower- and middle-class workers will bear the most burden, spending a greater portion of their incomes. According to Policy Matters Ohio, for six out of 10 Ohioans, “the amount paid in tax could actually go up.”
As the saying goes, the rich get richer and the poor get poorer.
Not only would Ohioans see their grocery and tobacco bills go up, but Kasich plans to extend these taxes even more broadly to services that were before unaffected. The 2016-17 proposal aims to include taxes on services such as cable TV subscriptions and parking/travel services, but the taxes don’t stop there; that new car you were looking to buy might just cost a little more because of reduced tax breaks on used-car trade-ins. According to state Senate Minority Leader Joe Schiavoni, even larger businesses “would be hit with a $691 million increase in the Commercial Activities Tax and senior citizens would have to pay $318 million more.”
So what’s the reasoning behind the governor’s tax cuts? According to The Columbus Dispatch, Kasich said income-tax cuts could make wealthier Ohioans want to stay in state and make investments that could create jobs. These statements are flawed: 21 out of 25 studies on “tax shift” since 2000 have shown that state and local taxes have very little or no impact at all on a state’s economic growth, according to a policy report from the Georgia Policy & Budget Institute.
Ohio needs to stop shifting the tax burden to Ohio’s middle and lower class. Cutting income taxes means 60 percent of Ohioans paying more per year. Ohio needs to reform the tax code to modern times and come up with a budget where it doesn’t just shift around the burden. By decreasing the sales tax and finding alternative sources of revenue, we can see an increase in savings across the board, giving lower- and middle-income families the tools to save and invest in their futures.
If Kasich really wants to encourage job growth, we need a budget that provides jobs.
Andrew M. Can
Fifth-year in economics
