COLUMBUS, Ohio — The Ohio Senate wants to expand income tax cuts for Ohioans more than the Ohio House of Representatives did in its version of the new two-year state budget.
What You Need To Know
- The Ohio Senate is proposing a 5% tax cut for Ohioans in the new budget
- The tax cut is 2% higher than the Ohio House proposed
- One group said it would save middle-income residents just $22 while anyone making more than $500,000 would see a tax cut northwards of $1,700 per year
However, the cuts themselves could be minimal for the working class.
The Senate’s plan for the biennium budget is a 5% income tax cut across the board, an increase from the 2% cut the Ohio House of Representatives passed in April.
“It’s part of a series of tax cuts that we have provided Ohioans over the years to make sure Ohio’s income tax is low and competitive and attractive,” said Sen. Matt Dolan, R-Chagrin Falls.
But it is unclear to some who the cuts are for.
Currently, Ohioans who earn less than $23,000 per year do not pay income taxes and Dolan, who chairs the Senate Finance Committee, said the proposal preserves that.
Yet, according to the Institute on Taxation and Economic Policy and the liberal think tank Policy Matters Ohio, the Senate’s idea would save middle-income residents just $22 while anyone making more than $500,000 would see a tax cut northwards of $1,700 per year.
“Why do we want to do that? I mean, we all know that we have seen increasing inequality. This is going to further reinforce it,” said Zach Schiller, Research Director at Policy Matters Ohio.
Senate Minority Leader Kenny Yuko, D-Richmond Heights, agreed.
“We need to build an economy that works for all people, and that starts by making sure our tax system is fair and balanced, not skewed in favor of the wealthiest,” Yuko said.
Schiller thinks the state should actually raise income taxes on the rich and create an Earned Income Tax Credit for the poor.
“That would create real tax savings for working Ohioans who are the poorest among us and who are paying more in state and local taxes than the affluent are,” Schiller said.
The top 5% would get almost half the tax cut if the senate’s plan comes to fruition and The Buckeye Institute, a conservative think tank, supports that.
At the same time, Greg Lawson said it should only be the first part of a larger overhaul of the tax system in Ohio.
“If we want to do things that are competitive, we need to look at how we tax things as well and there’s a whole bunch of other reforms that we can be looking at in this state to reduce the income tax and have still have a very competitive tax structure that funds what needs to be funded but is also better for the long term creation of businesses and job opportunities,” said Lawson, a Research Fellow at The Buckeye Institute.
The Senate Finance Committee is meeting Tuesday to further discuss the budget and barring any setbacks, Senate President Matt Huffman, R-Lima, has said the budget will be brought to the Senate floor for a full vote Thursday.
