Kasich to Reform Income Tax in 2013

Kasich to Reform Income Tax in 2013

Posted in the Columbus Forum

Enzyte Bob

Blacklick, OH

#1 Jul 31, 2012
Kasich aims for sales-tax ‘reform’ to pay for income-tax cut
By Joe Vardon

The Columbus Dispatch Tuesday July 31, 2012 11:41 PM

“You’ve got to remember a 5.9 percent income tax is ridiculously high for our state,” Gov. John Kasich said.

Gov. John Kasich is going to take a big whack at the state’s income tax in 2013.

His club of choice: The more than $7 billion in tax credits, deductions and exemptions the state grants each year.

Kasich has not been one to hide his intention to further lower the income tax next year, potentially far beyond his proposed $500 million cut funded by a “frack tax” boost that’s still languishing in the legislature.

But sources with knowledge of the governor’s thinking said he’s eyeing a “huge” state income-tax cut paid for, in part, by limiting what his staff refers to as tax “loopholes”— which primarily are exemptions from the state sales tax.

Of the $7.8 billion the state would forgo in tax expenditures next year, about $5 billion would come from sales-tax exemptions.

Limiting these exemptions is not the only way Kasich could justify or fund an income-tax cut. Kasich proposed $113 million in savings through the recent mid-biennial review process; last year’s budget saved more than $1 billion through Medicaid reforms; the state is due $500 million once it leases its liquor profits to JobsOhio; and its rainy-day fund climbed above $480 million last month.

But limiting or stopping items such as a sales-tax exemption for prescription drugs, income-tax deductions for spouses and children, and a $50 credit for contributions to political campaigns could prove daunting politically, if history is any indication.

Kasich seemed to tip his hand today when he said,“We’re always working to figure out how to lower the income tax, and it will involve tax reform.”

Commenting after a Columbus news conference to announce jobs, Kasich added,“I can tell you that when we engage in tax reform there will be a lot of squeals and a lot of howls from people that want to be for the status quo.”

Gubernatorial spokesman Rob Nichols said,“Closing loopholes has always been a priority for him, and going back to his days in Congress he’s been unafraid of taking them on and shutting them down. If it helps fuel further badly needed tax cuts that can help create jobs, then it’s a twofer for Ohioans, but it’s premature to begin guessing games about what any future comprehensive tax-cut package would look like.”

Kasich’s current proposal to boost taxes on shale drillers and cut the income tax would amount to a 5 percent cut after a few years. In 2005, Ohio phased in a five-year, 21 percent cut in income-tax rates at the rate of 4.2 percent a year.

In past debates over tax cuts and spending, including over Kasich’s frack tax/income-tax-cut plan, Democrats and even some Republicans have expressed their desire to funnel money to schools and local governments.

“You’ve got to remember a 5.9 percent income tax is ridiculously high for our state,” Kasich said.

Two recent efforts in the legislature to approach the notion of limiting tax deductions stalled, first when House Republicans balked at including a tax-expenditure study in the budget passed last year, and again this year when the Senate Ways and Means Committee failed to craft a report on whether all the expenditures make sense.

Even though limiting deductions and exemptions could add billions to state revenue, there has been a historical reluctance at the Statehouse to broach doing away with loopholes because many consumers, businesses and nonprofits enjoy them. Ohio churches, for example, pay no sales tax on money they spend, costing the state more than $430 million.

There is no sales tax charged for the installation of cable TV or satellites dishes, costing the state $95 million a year, but no doubt pleasing Ohioans who want to watch the Indians and Reds, or order the NFL Ticket next year.
Enzyte Bob

Blacklick, OH

#2 Jul 31, 2012
The state will forgo about $1.6 billion from manufacturing equipment and $16.3 million from newspaper sales.

Large or small, the deductions have built-in constituencies, and taking away those deductions could be labeled a tax increase.

“The special-interest groups dominate,” Kasich said.“And it’s not just big spenders. It’s people who say ‘No, I like what I get from the government ... and if you change it, it’s really not good for me.’ So they yell and scream at the decision-makers, the policymakers, and it never happens.”

To view the full list of the state of Ohio’s tax exemptions, go to

http://tax.ohio.gov/divisions/communications/... .
The Author

Columbus, OH

#3 Jul 31, 2012
It sounds like more smoke and mirrors economics. Cut here, add there, who benefits and who loses?

I still can't understand why we have to pay sales tax on toilet paper. Aren't necessities supposed to be exempt? What're we supposed to do, use a handful of gravel like the towelheads use?

Kramers Attorney

Since: Apr 12

Hilliard, OH

#4 Jul 31, 2012
The Author wrote:
It sounds like more smoke and mirrors economics. Cut here, add there, who benefits and who loses?
I still can't understand why we have to pay sales tax on toilet paper. Aren't necessities supposed to be exempt? What're we supposed to do, use a handful of gravel like the towelheads use?
Be glad we're not Arkansas and West Virginia, where all grocery food items are taxed. That's a crime.
Conservative

Greenville, OH

#5 Jul 31, 2012
I always get a kick out of the phrase no matter what government (local, state or fed) says it. The phrase...... "How to pay for the tax cuts".

Now we know that a tax cut just allows us to keep more of our own money. So how does a tax cut cost them money to give us ours back?

It doesn't. It just means they have less money that they over spent and by giving us our money back they have less to pay for the crap they over spent on.

Give me back my money and spend within your means.

Since: Jun 11

Location hidden

#6 Aug 1, 2012
Nice. "We are going to give you an income tax break but we are going to put a higher tax on some of your purchases. Maybe you come out ahead, maybe you don't. But at least I can put down on my resume that I reduced Income Taxes!"

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