Several incarnations of the budget before this one, I wrote about how retirees would be disproportionately impacted by the then proposed budget. Well, now we have a final, passed and signed budget – and the news is even worse for retirees….
Kasich’s budget shifts the tax burden from the wealthy onto those who are lower income or on fixed incomes – especially retirees. There is an income tax cut which disproportionately helps the wealthy and does little to nothing for those who are retired. There is a sales tax increase – which disproportionately hurts those who are on fixed incomes. Those who are retired are spending most if not all of their income – and depending upon the retirement investments they might have, they are frequently spending their savings too. So the money being spent will now be taxed at a higher rate. In short, the tax shift creates a more regressive tax structure from a progressive one. (Policy Matter Ohio did a nice breakdown of the impact by income bracket here: http://www.policymattersohio.org/itep2-jun2013).
But that is not the worst of the budget woes hitting retirees. Retirees who own their own home will face even more of the Kasich tax shift burden. The Cincinnati Enquirer estimated that the average homeowner in Southwest Ohio will face at least $400 more in property taxes a year.
Local government funds continue to be hit as do school districts. That means that either services will continue to be cut or there will be more levies. But Ohio did away with paying their portion of levy money (12.5% property-tax rollback) that has been in effect since 1971. So, every levy will cost homeowners even more. Yes, voters can reject those levies. But that means cuts to Senior Services, fewer first responders, poorer roads, or worse school districts. Even when retirees don’t rely on these services (such as schools), having them deteriorate means the value of their home declines – and for most retired homeowners, their home is their largest asset. When they do use the services, the cuts can be quite serious. Everyone wants (and expects) the EMTs to arrive quickly after a medical emergency is called in.
And then young retirees or those who hope to retire in the near future face an additional hit. Ohio has a homestead exemption for seniors. That means, if you are over 65 years old, the first $25,000 in value of your home is not subject to property tax. If you are already 65 by December 31; you are golden in this respect and will be grandfathered in. However, if you are 64, you might no longer get the exemption. Because now, the exemption will only be offered to those who are 65 AND who make less than $30,000 a year (the $30,000 income is inclusive of most pensions). So, if you are a middle class Ohioan who turns 65 next year, but isn’t retired yet because you don’t yet qualify for Social Security, you can probably kiss that homestead exemption good-bye.
The members of the Ohio Alliance for Retired Americans (of which there are about a quarter of a million) don’t mind paying their fair share. We, at the Alliance, know that there are needed public services that create strong communities. We also know that those public services need to be paid for with public money. But it is simply not fair to shift the tax burden onto retirees in order to cut taxes for millionaires or in order to giveaway deals for Republican donors. Unfortunately, this is exactly what the budget signed by Kasich does.
Bentley Davis is the State Director for the Alliance for Retired Americans in Ohio