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As Gov. John Kasich’s re-election campaign shifts into high gear, his administration is extolling the $800 million surplus in the current two-year state budget. The Republican governor and lawmakers are congratulating themselves on budget legislation they enacted that will give Ohio taxpayers more than $400 million in tax cuts this fiscal year.
But these officials are not discussing how much they have tilted this tax relief to the wealthiest Ohioans, and how much less it will do for middle-income, working-class, and poor families. They aren’t talking about how they built the surplus by making only small, partial restorations in their previous deep cuts in aid to vital state services and to local governments and school districts.
They did these things at a time when the state’s infant death rate remains heartbreakingly high, when addiction among Ohioans to heroin and prescription opioids threatens to spiral out of control, when joblessness remains too pervasive, when communities such as Toledo are battling blight and property abandonment related to Ohio’s foreclosure miseries, when slashes in state aid are forcing districts such as Toledo Public Schools to seek tax hikes, when local streets remain pocked by potholes, when students and their parents struggle to afford tuition at public universities. Before Ohioans vote this November, they need to consider such issues.
Governor Kasich and the GOP-controlled General Assembly enacted several measures this year updating the state budget at its midpoint. They accelerated a scheduled income-tax cut by a year. The amended budget also temporarily increases an income-tax deduction for a class of small-business owners — even though most of them employ no one.
According to an analysis done for the progressive advocacy group Policy Matters Ohio by the nonpartisan Institute of Taxation and Economic Policy, fully half of this year’s $400 million tax cut will go to the top 5 percent of Ohio taxpayers.
Ohio’s 1 percent — those with average annual incomes of more than $1 million — will get tax relief of $1,846 this year, on average. The poorest 20 percent of Ohioans — those who earn less than $19,000 a year — will get an average tax cut of $4.
This tax relief is not proportionate to income, the study says. It is deliberately skewed to favor the richest Ohioans.
Policy Matters also notes that the budget measures include several new special-interest tax breaks: for investors in small businesses that aren’t creating jobs, for a specific company (Hitachi Medical Systems America Inc.), and for a specific fraternal organization (the Loyal Order of Moose). Such loopholes distort the state’s tax system rather than improve it.
The budget changes do some modestly good things for lower-income Ohioans. They increase the personal exemption on state income tax returns for taxpayers who make less than $80,000 a year.
They also double the state’s year-old earned income tax credit, to 10 percent of the federal credit. But this benefit is too limited to help Ohio’s poorest wage earners, because it is not refundable to those whose income-tax liability does not exceed the credit.
The budget earmarks more money to protect children and old people from abuse and neglect, and to subsidize child care. But such items, however useful, are no substitute for the broad-based state investment in education, public health, human services, and infrastructure maintenance that Ohio needs.
Ohio’s tax-cut strategy, now nearly a decade old, has not worked. It has not redeemed advocates’ promises of job creation and economic growth. It has widened economic inequality and jeopardized the ability of state and local governments to provide essential services.
Yet Mr. Kasich and GOP lawmakers are basing their re-election bids on this failed program. Ohioans need to look closely at the product on offer this November.