COLUMBUS, Ohio – The moment of reckoning has arrived for Gov. John Kasich’s tax plan.
The Republican governor wants to lower Ohio’s income tax 20 percent over three years and reduce the tax rates on consumer sales and small businesses. He’s proposed doing so by raising the severance tax on large-scale oil and gas drilling and by applying sales taxes to a new list of services as varied as those offered by lawyers, accountants, amusement parks and rock concerts.
GOP leaders at the Statehouse are balking. In a rare move Friday, Ohio House Speaker William Batchelder and Senate President Keith Faber spoke out jointly to simultaneously praise the governor and signal his tax plan may be faltering.
The window for initial action in the House is rapidly narrowing, Batchelder and Faber said in their statement. Therefore, we strongly encourage all affected parties, particularly job creators and those in the business community who would be most affected by these proposals, to share their views with members of the legislature quickly.
Translation: The heat is on at House Finance hearings resuming Tuesday on Kasich’s $63.2 billion, two-year state operating budget.
Kasich’s tax reform package significantly rewrites Ohio’s tax code in a way he says better reflects Ohio’s shift from a manufacturing to a service economy. It delivers $1.4 billion in overall tax cuts over the three years, a critical factor in qualifying it as a tax cut, not a hike, in the eyes of the tax hike-opposed Americans for Tax Reform.
The administration plan reduces the tax rate on virtually all small businesses by 50 percent, cuts the sales tax rate from 5.5 percent to 5 percent, and reduces the income tax 7.5 percent this year, another 7.5 percent in 2014 and an additional 5 percent in 2015.
Yet business leaders have lined up to criticize the plan, arguing new sales taxes will be burdensome to impose, unfairly double-tax them in places and ultimately harm the bottom line.