CHICAGO Ohio Gov. John Kasich urged lawmakers in his recent State of the State address to continue his quest to overhaul the state’s tax system by lowering income taxes.
“Some taxes have a greater drag on economic growth than other taxes,” Kasich said Feb. 24. “So if we’re going to raise taxes or if we’re going to have taxes let’s have the taxes that have the least negative impact on the private economy in the least harmful way.”
The cuts are part of Kasich’s larger effort to revamp the Buckeye State’s tax policy by shifting the burden from income taxes to so-called consumption taxes and increasing severance taxes on oil and gas producers, changes featured in his recent two-year budget proposal.
Ohio lawmakers will spend the next few months crafting the final two-year budget.
The governor wants to cut income taxes by $500 million by reducing the personal tax rate by 23% and eliminating entirely the tax for small businesses worth under $2 million.
“Low taxes signal to job creators that Ohio is a safe place to invest,” he said.
Kasich, who won a second term in November, has enacted more than $3 billion in income tax cuts since taking office. The current two-year budget features the largest income-tax cut in the state’s history, and the executive budget features another 23% reduction in the personal rate.
The governor’s latest personal income tax cut would reduce it to 4.1% from 5.9% five years ago, according to Kasich.
His budget would also increase the state sales tax to 6.25% from 5.75% and expand it to cover some services. He also wants to increase the commercial activities tax, cigarette taxes and taxes on oil and gas production.
“Ohio's severance tax was created decades ago, long before Ohio's shale boom was ever envisioned,” Kasich said, noting the current tax is 20 cents a barrel. “It’s unconscionable as far as I’m concerned.”
Ohio is rated double-A-plus by the three major rating agencies.
“We are doing better,” Kasich, who like a handful of Midwestern GOP governors is eyeing a 2016 presidential run, said during the address. “And the plan my administration has laid out provides a path I believe will propel us higher and higher.”
