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Budget Focus Continues On Right Path

Yesterday, the Ohio Senate released its changes to the biennial budget plan currently moving through the legislative process.  And while there’s some details of lesser note, making Ohio more business friendly continues to be a main focus.

Senate President Keith Faber said favoring a tax cut for small-business owners over a cut for all Ohioans is a means to job creation.

“While we all support a 7 percent across-the-board income tax cut, we just did a 4.5 percent across-the-board income tax cut,” said Faber, a Celina Republican. “While I’m sure it helped at the margins, the reality is we want to do something that’s targeted to those 95 percent who are creators of the jobs.

“We believe the small-business tax cut will directly grow jobs in the immediate future.”

Though a personal income tax cut sounds all good & great, the small-business tax cut will have a greater impact on driving our state’s economy and helping all Ohioans.  The 7% income tax reduction from the Ohio House was a good step, but it barely returned enough to my middle class family to order an extra pizza once a month.  Regardless, both proposals have merit, and are aimed at putting Ohio on the right path.

Ultimately, I believe some version of Governor Kasich’s original proposal is the next big step for Ohio’s tax system, though it most likely won’t be achieved this year.  A substantial reduction, if not elimination, of the state income tax is necessary to keep Ohio competitive with other states, both for individuals and businesses that pay at the personal level. 

And while there has been a lot of criticism—some justly—the idea of broadening the sales tax base is one Ohio must consider.  Decades ago, Ohio had a goods-based economy; now, we’re more service-based.  If a tax must exist, it has to be able to go after the dollars where the activity exists.  And a consumption tax is the fairest tax—if you use it, you should be taxed, just like everyone else.

That said, Kasich’s original sales tax proposal bit off more than it could chew and would have been a nightmare to implement.  Changing a huge portion of the tax code in only a couple of months?  Commissioner Testa is good, but that’s asking a lot.

At the end of the day, this budget won’t be anything remarkable in terms of tax reform, but it will be a stepping stone in the right direction.  Both the House and the Senate deserve credit for keeping the focus where it needs to be.

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Third Base Politics is an Ohio-centric conservative blog that has been featured at Hot Air, National Review, Washington Post, Los Angeles Times, Pittsburgh Tribune-Review, and others.


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