Ohio Lawmakers Enact Tax Cutting Budget

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Posted by Caroline Anderegg on Monday, July 6th, 2015, 2:02 PM PERMALINK

Governor John Kasich (R-Ohio) signed a two-year, $71 billion budget last Tuesday.  Though the House gave his budget a much needed makeover, he used his line-item veto power 44 times before allowing HB64 to become law.

The budget Kasich initially introduced would have implemented $5.7 billion in tax cuts.  The primary beneficiary was the income tax with a 23 percent, across-the-board cut and small business exemption from personal income tax for those with $2 million or less in annual gross receipts.

Hold your applause.  Gov. Kasich’s budget also included $5.2 billion in tax hikes.  The biggest losers in Kasich’s budget would have been the sales tax, with an increase from 5.75 percent to 6.25 percent statewide, and the commercial activities tax.  The governor’s budget also proposed a cigarette tax hike to the tune of a dollar-per-pack, as well as the implementation of the state’s first e-cigarette tax and an expansion of the sales tax base, among others.  At the end of the day Kasich’s budget would have only resulted in a $523 million tax cut for Buckeye taxpayers.

Dissatisfied with the governor’s budget bill, Speaker of the Ohio House Clifford Rosenberger stepped up to the plate and went to bat for Ohio taxpayers.  Speaker Rosenberger and other House Republicans crafted a budget bill that enacted real tax relief for Ohioans. 

“Our balanced budget provides for a $327 million surplus at the end of FY’ 17, as compared to the $27 million in the governor’s plan—ensuring a balanced budget that spends less in GRF funds than the governor’s initial proposal,” Speaker Rosenberger said in a statement following the House’s passage of the budget bill through the chamber with bipartisan support.

The significant features of Rosenberger’s budget were a 6.3 percent across-the-board income tax rate cut, a plan to phase out taxes on the first $250,000 in small business income, and a permanent 75 percent small business deduction, while lowering the top income tax rate to just below 5 percent.  The bill also eliminated the increases in sales tax, CAT, and severance tax.

While the House voted to throw out the proposed e-cigarette tax, they compromised with the state senate on the cigarette tax hike.  Smokers will pay another 35 cents per pack now that the budget has the governor’s signature.

In a recent report the Buckeye Institute regarded the House budget as a “true rarity” in that it was both growth-oriented and proposed spending less money from the General Revenue Fund than the governor’s budget did. 

After Kasich’s vetoes, which largely targeted benefits the state senate had sought in order to relieve the tax burden on large businesses and industries, the budget bill netted $1.9 billion in tax cuts.  While Kasich and Rosenberger are both playing for Team Taxpayers, this go around Rosenberger was clearly the MVP.

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