Proposed end to Ohio income tax sparks reactions
By Kate York, kyork@mariettatimes.comFact Box
About House Bill 534
The bill phases out the income tax on individuals, estates and trusts, beginning in 2010. For taxable years beginning 2019 and after, no tax would be levied.
A bill that would phase out Ohio's personal income tax over 10 years needs some work before it would gain the support of local residents and the area's state senator.
House Bill 534, introduced in April, would eliminate the income tax, which brings in $9.1 billion annually- or 43 percent of the state's revenue-in an effort to make Ohio more small business friendly.
The bill's 18 Republican co-sponsors have said in published reports that the state's income tax makes it less desirable than adjoining states to business owners and makes it difficult for small businesses to grow.
"Most of the smaller businesses in the area are formed with a sole proprietor or as LLCs, and they're taxed on the profit of the business," said Pamela Lankford, director of the Small Business Development Center in Marietta. "Anything that reduces that tax burden is beneficial for them. This could spark more developing businesses, but there would have to be a marketing aspect. The word would have to get out there."
Everyone would like to see the tax disappear, said Ohio Sen. Joy Padgett, R-Coshocton, but so far there have been no options presented for how to replace the money it brings in.
"Conceptually, I support this," she said. "I think it's a wonderful thing to do, but realistically I would want the sponsors to demonstrate where the lost revenue would come from. No ideas have been presented."
The income tax is the largest source of revenue for the state. If major budget cuts would be considered due to the lost revenue, they would likely have to come from education, human services/Medicaid, prisons or property tax relief, the four areas where 94 percent of Ohio's tax money is spent.
"Ideally people should have control of their money and where it goes, but we do have expenses, like education and Medicaid," Padgett said. "There are obligations we have."
Ohio Rep. Jennifer Garrison, D-Marietta, did not return a call for comment on the bill.
Bill Lewis, 61, of Marietta, said he would love to have the extra money but doesn't want to lose services in the state.
"I don't see how they could do this without having another tax to replace it," he said. "The state has to get money from somewhere."
But while the tax elimination would benefit small business owners, it's not something high on the list of their challenges, Lankford said.
"Initial access to capital is a much bigger concern," she said.
While supporters argue the economic benefit from eliminating the tax would make up for the money lost, Padgett disagrees.
"I haven't seen any numbers yet that indicate that the growth of jobs would supplant what we're losing on the other side," she said. "But this is one of those pieces of legislation that gets a lot of conversation going, and that's a good thing. It's a good conversation to have."
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CluelessOH
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07-10-08 4:58 AM
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Forget about retirees. Its the young people that have to move out to find work. And if they lower taxes in one place they will just raise them in another. And most of the time when they raise them in another, they will make them higher.
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Parrothead
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07-09-08 7:34 PM
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Another way to keep retirees in Ohio is to get rid of the estate tax.
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hockeypuck
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07-09-08 5:39 PM
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Ditto to Contrarian.
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Contrarian
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07-09-08 2:28 PM
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It's a way to bring discipline to Ohio's spending, which has been out of control. Ohio is a high tax state. Watch revenue soar once the tax is repealed, because it will make Ohio an island of sanity, and will slow the outflow of retirees and their dollars to low tax states like Florida.
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