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Tax commissioner keeps up push for state tax reform
By Marc Kovac
COLUMBUS
The head of the Ohio Department of Taxation again made the case for Gov. John Kasich’s latest tax-reform package before a legislative panel.
And, again, Republican and Democratic lawmakers didn’t offer vocal endorsements or indicate the proposed increase in tax rates on cigarettes and other tobacco products, commercial activities and oil and gas produced via fracking or the corresponding across-the-board income-tax cut was on a fast track for passage anytime soon.
Much of Tuesday’s hearing in the Ohio House’s Ways and Means Committee was a repeat of comments made by Tax Commissioner Joe Testa earlier this month after Kasich unveiled his mid-biennium budget package.
Republicans in the House have since split the larger legislation into more than a dozen bills that are being considered in separate committees.
Testa’s testimony Tuesday included an overview of tax reforms implemented since the governor took office, including continued rate cuts for individuals and businesses.
Testa also offered further evidence of the need for more reductions, saying the state’s tax rates are hindering business growth.
“We have made progress, but still, over the last 10 years, states with no personal-income tax performed best in gross state product, job creation and population growth,” he said. “Leading economists believe, and economic studies show, that high income taxes harm job creation.”
He added, “Lowering income-tax rates will not only help keep Ohioans in Ohio, it will also lower the cost of doing business for our small-business employers so they can grow and create even more jobs for Ohioans.”
Kasich has proposed an 8.5 percent income-tax cut over the next three years, plus an increase in the state’s earned-income tax credit and personal and dependent exemption rates for residents earning up to $80,000.
Those tax cuts would be covered via increases in cigarette taxes to 60 cents a pack over two years (to $1.85 from $1.25), other tobacco taxes to bring other products in line with cigarettes and the commercial activity tax to 0.3 from 0.26 percent.
The governor also has outlined a revamped plan to increase taxes on oil and gas produced via horizontal hydraulic fracturing.
But lawmakers from both sides of the political aisle pressed Testa on the tax changes.
Democrats questioned whether tax cuts were a primary driver of business growth and asked Testa whether tax cuts that would provide bigger benefits for residents but potentially more costs for lower-income households. They also voiced concern about cuts to state funding of local governments.
Rep. Jack Cera, D-Bellaire, said small communities in his district have had to seek voter approval for tax increases to cover the loss of state funding.