State budget could increase taxes for small businesses
A budget passed by the Ohio House of Representatives and being considered by the state senate includes tax breaks for nearly every Ohioan except for small business owners.
House Bill 166 proposes that people making less than $22,500 a year will not have to pay any state income tax, with a 4.7 percent tax cut for people making less than $88,000. But the bill also lowers small business’ tax exemptions from a $250,000 cap in profit to $100,000. The bill moves to the senate and must be approved no later than June 30.
Ohio Rep. Don Jones, R-Freeport, is a co-sponsor of the bill and said there are always problems when trying to determine how the state’s money should be spent.
“There’s never a perfect budget,” he said.
Jones said he has been informed that the decrease in the amount of the tax exemption for small businesses won’t affect the majority of them in the state.
“It won’t be an issue for 86 percent of the small businesses that pay taxes,” he said.
In a statement, Ohio Sen. Frank Hoagland R-Mingo Junction, said he didn’t support the decrease in the amount of income that is tax exempt for small businesses in the state.
“Unfortunately, the small business tax cut has been unfairly politicized. I support the goal of letting small businesses keep more of their own hard-earned money, to reinvest in their operation, expand and hire Ohioans. I don’t support reducing the tax cut to job creators and innovators,” he said.
Dennis Farrar, owner of Murray’s Glass and Automotive Paint on Front Street, said a loss in tax breaks for businesses is the last thing the state needs. He said the new tax law wouldn’t be an issue for businesses as small as his or his neighbors on Front Street, but will most likely end up hurting other businesses in the county.
“I imagine it’s going to be a big problem,” he said.
Farrar is also the co-owner of Oesterle Auto Glass and Paint in Parkersburg and said Ohio’s more relaxed tax laws compared to West Virginia’s helps draw business owners across the river into Washington County.
“That’s one of the benefits about Ohio,” he said. “A lot of people come over here because of that.”
But the new tax laws in the budget will positively affect low-income workers like Elizabeth Rinard, 53, of Marietta, a cashier at a convenience store in the county. She said the state has already taken just over $400 this year in taxes that could have been used to help pay bills and get a better apartment to live in.
“It would help me greatly,” she said of the potential tax exemption. “I’d actually be able to breathe a little bit.”
At a glance
•The Ohio House passed a budget on May 8 that reduced the amount of tax exempt profit for small businesses from $250,000 to $100,000. The budget also excludes people making less than $22,250 from paying any state taxes.
•Ohio Rep. Don Jones said the smaller tax exemption for businesses will only affect 14 percent of them in Ohio.
•There is a June 30 deadline for the budget to be passed in the senate before it can be signed by Gov. Mike DeWine.
Source: Times research.