Wanted: Tax cut details
Lowering all Ohio income tax rates below the 5 percent threshold was just one of the many goals mentioned by Ohio Gov. John Kasich during his State of the State address Monday night in Medina. The cut would bring Ohio more in line with many other state’s income tax rates and stimulate the economy and hiring, said Kasich.
While many residents do not oppose lower taxes, they do say they’d like to see more details, which were sparse during Kasich’s address.
Marietta resident Louise Gwinn, 76, said income tax breaks would be beneficial if Kasich goes through with them. However, she questioned where the lost revenue would be made up.
“When you start lowering and lowering taxes, you’re taking away from things like schools…you have to cut from somewhere,” she noted.
Kasich did not explicitly address how the lost revenue would be made up.
However, the proposed severance tax on the oil and gas industry in the state could be a part of that, said Kasich’s press secretary Rob Nichols.
“We’re pleased that the House and the Senate are back at the table on that,” said Nichols in reference to the severance tax.
Also lacking were details on how steep the cuts would be and who would be affected.
While the governor’s office plans to introduce its mid-biennium budget in the coming weeks, the proposed cuts have only been talked about in broad terms, said Nichols.
The only ones guaranteed an income tax reduction based on Kasich’s remarks are those currently paying more than 5 percent in income taxes.
“We’ve got to keep cutting taxes. That’s why I’m proposing another round of tax cuts that will finally succeed in getting Ohio’s tax rate below 5 percent,” said Kasich, according to his speech text as reported by the Associated Press.
Currently only the top tier of Ohio’s nine tax brackets pays more than 5 percent in income taxes. Individual Ohioans earning more than $208,500 annually pay 5.421 percent on earnings over that figure.
The next bracket, for individuals earners between $104,250 and $208,500 annually, already pay less than 5 percent, though barely.
When Kasich lowered income taxes in the 2013 taxable year, all nine tax brackets were affected. All other income tax reductions since 2005 have also been across the board.
Even without specifics in place, many are confident the reduced income taxes would be good for the economy.
Keith Malone, owner of Malone Renovations, said he is always in favor of lowering taxes.
“I believe not only should we lower taxes, but look at it on the other end as far as how our tax dollars are spent. If we cut out the waste, it’s better for the state and the residents,” he said.
Malone said his company has seen more business over the past few years and could see how tax breaks would equate to more business, especially with the kinds of small renovation projects that are popular around tax season.
Marietta College Economics professor Jacqueline Khorassani said the idea behind income tax reductions is to stimulate spending, but whether or not individuals will choose to do so is hard to predict.
“Really what happens after this tax cut goes into effect depends in part on how consumers react to this. If they don’t spend it, there’s no immediate effect on sales and businesses,” she said.
Consumers typically choose to spend extra income when consumer confidence is high and save money when consumer confidence is low.
Marietta resident Rodney Lockhart, 51, also said he would not mind statewide income tax reductions, but would rather see income tax reductions closer to home.
“I’d rather see it in the city,” he said.
Lockhart lives in Marietta but often works out of town and does not feel it is fair to be taxed twice.
Marietta’s income tax is 1.7 percent for adults who live and work in the city.
Lockhart also decried giving tax breaks to the wealthiest individuals and corporations in the state.
Williamstown resident Rob Brashear, 55, would not be affected by Kasich’s proposal, but he did grow up in Marietta and has strong opinions on taxation.
“I want a consumption tax,” he said.
The way Brashear sees it, state income taxes could be done away with entirely and residents could be made to pay taxes on goods and services.
The consumption tax would avoid what Brashear sees as a large problem, tax loopholes for the rich.