Well, at least the Columbus Dispatch on Monday at least mentioned it was a Republican proposal, even if they did consciously fail to mention that it’s the centerpiece of John Kasich’s campaign.

Here’s what the Dispatch had to say about what has been the centerpiece of John Kasich’s campaign:

The latest, from Republican Rep. John Adams of Sidney, would drop a nuclear bomb on the budget by eliminating the state income tax over 10 years. That’s the same income tax that couldn’t be reduced even a little bit in the current biennium; lawmakers had to postpone a previously approved cut in the tax in order to generate most of the $851 million needed to erase a shortfall.

Ohio’s income tax generates about 40 percent of state revenues. In current terms, that’s about $15.7 billion a year. Adams’ bill would reduce Ohioans’ income-tax obligations by 10 percentage points each year, until in the 2019 tax year and thereafter, it would be zero.

For the next biennial budget, that would mean a drop in income-tax revenue of about 20 percent, or $3 billion and change.

Does Adams really mean to cut that much from state spending?

Wiping out the entire Department of Natural Resources — no state parks, nobody watching over Ohio’s natural and wilderness areas, nobody maintaining hunting and fishing access — would save just $64.5 million, just a little more than 2 percent of the required reduction. What would the full cut look like in the next biennium, let alone by 2019?

Perhaps Adams and other would-be income-tax radicals mean to make up the difference with sales taxes or something else. In that case, they should be forthcoming with that little detail.

Adams’ pitch is simple and not without some truth: Lower income taxes would encourage economic development and might persuade more people to stay in the state and be more productive.

But that leaves out the inescapable reality that the state has a large budget that won’t be cut without tremendous political and social pain.

Nobody expects the Dispatch(R-Columbus) to address the fact that repealing a tax that most employers don’t pay will not, therefore, create jobs.

However, the Dispatch is the first major media outlet to mention that the centerpiece of Kasich’s campaign will create a massive deficit in Ohio’s budget, even when the Republicans in the General Assembly could not tolerate making any further cuts to the state’s budget.  (Not even Adams proposed a series of budget cuts he’d support in lieu of a tax freeze.)

 
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  • scottpullins

    I'll quibble with you slightly here. Employers do pay this tax, primarily small business employers.

    Many small businesses are owned by one person or one person and their spouse. The IRS will consider a husband and wife as one person for tax purposes in this case. The largest tax these businesses pay is the income tax which is passed through to their personal tax returns.

    Likewise, small businesses with a larger number of owners typically also pay the income tax as it is passed through to their owners.

    That said, no state has been able to do this, especially in a short time frame like 10 years. The proposals I looked at several years ago called for a 20-25 year phaseout.

  • modernesquire

    Scott, you are correct which is why I said most employers don't pay the personal income tax, instead of “no employers”. I am aware of the exception that self-employed people such as myself, pay the income tax instead of a corporate tax rate. However the exception to the rule does not negate the existence of the overall rule.

    My larger point still remains, Kasich is talking about this tax repeal as if it's prevent manufacturing jobs from coming into this State. That is nonsense as those companies are so large-scale that they are organized in such a way that they don't pay a personal income tax rate.

    The fact that the personal income tax may discourage self-employment type business structures, in my opinion, though is an incredibly weak, almost de minimis, factor into Ohio's unemployment situation.

    Given that Kasich's “cure” would result in a massive deficit approaching $3-4 billion a year for each of the ten years, that's a very expensive solution to remove an alleged economic barrier that at most is a de minimis factor to our unemployment and other economic issues.

    Kasich himself has not detailed his timetable. Regardless, it's clear that to call it a repeal is itself insincere as such plans require the cooperation and acquience of future General Assemblies and Governors.

  • scottpullins

    I got ya.

    As I've stated here before, a responsible way to improve Ohio's income tax situation is to adopt a low flat rate income tax that exempts those folks that make under $20k while modestly cutting taxes across the board for others. This could be done in a responsible manner without busting Ohio's budget wide open.

    Frankly, I see a scenario where Governor Strickland can run as a more fiscally responsible candidate than Republicans. Ohio is now rated 11th overall in the country in the Small Business Survival Index. Strickland was graded a B from CATO in its 2008 fiscal report card while Taft got F's and Voinovich got D's. Strickland has grown government at a lower percentage than Taft or Voinovich. Then you throw in this whacko tax repeal idea from Kasich and crew.

    Ted Strickland 2010 – Fiscal Conservative.

  • Does anyone else mind if I formally invite Mr. Pullins to write a guest post at PB?

  • mvirenicus

    will the invitation be engraved, like the kind of invitation required by a cleveland driver to actually move when the light turns green?

  • foxlocks

    Wait. Isn't the division of wildlife funded by a federal tax Pittman/Robertson and by licenses fees.?

  • At

    Repealing Ohio's state income tax is not the best thing for Ohio's citizens. I just read this testimony by a nonprofit group at:
    http://www.policymattersohio.org/TestimonyOnHB4

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