The Ohio legislature is still at work on the state’s tax laws and it is unclear what the final result will be, given the competing options percolating in Columbus. The Senate is working on a proposed cut of $500 million more than the House proposed. And the House tax plan is different from the governor’s tax proposal.
The Senate plan would exclude the first $250,000 of business income. The Senate leader argues that it is “discriminatory” for business owners to have to pay income tax and commercial activity tax. Critics suggest that such tax cuts do little to improve the business climate or create job.
Often the difficult part of a tax cut is attempting to balance the budget with other increases. Some of that tax increase would be placed on cigarettes, and items like e-cigarettes. An increase in the sales tax is also likely, though the amount vary. For a taxpayer, the concern is always one that they may raise other taxes and fees that end up eliminating any real tax savings.
There is a contentious debate with the use of a severance tax on the oil and gas industry. The governor’s tax plan included a severance tax but the House rejected that option. Severance taxes are frequently popular, because like taxes on hotels and airports, much of the tax burden falls on non-residents, who don’t get to vote against the politicians raising their taxes.
Because taxes are only one component of a state’s economy and business environment, they amounts of revenue they raise can vary and the benefit they produce can be difficult to judge. Which means that no matter what the legislature completes this session, changes are likely in the next legislative session. If death and taxes are all that are certain, with taxes, the only certainty is change.
Source: dispatch.com, “Senate Republicans want larger Ohio income-tax cuts than House,” Jim Siegel, June 2, 2015