Ohio's tax commissioner was in Marietta Monday to champion the administration's current tax proposals and receive feedback from area officials and business owners.
Around 20 people, including members of area chambers of commerce, Washington County Commissioners, and other officials from Marietta, Belpre, and Washington County were on hand for the presentation at Washington County's Emergency Operation's Center.
The crux of the tax proposal would pile more income tax reductions-another 8.5 percent cut at every level-onto those cuts already being phased into Ohio's nine tax brackets, thus putting more money in the pockets of Ohioans and making the state more attractive for development, explained Tax Commissioner Joseph Testa.
"Our personal income tax rates are still too high," he said.
The new cuts, proposed in Ohio Gov. John Kasich's Mid-Biennium Budget Review, would bring Ohio's top income tax bracket below the 5 percent threshold and would include personal exemptions and increased Earned Income Tax Credit to help bolster the impact for those in lower and middle tax brackets, said Testa.
"What we've proposed are some tiers (for personal exemptions)," he said.
At a glance
Highlights of Mid-Biennium Budget Proposal:
Would cut personal income taxes by an additional 8.5 percent over the next three years.
Would increase the potential Earned Income Tax Credit for Ohioans from 5 to 15 percent of the federal level.
Would increase the personal exemptions amount for those making less than $80,000 annually.
Would increase severance tax on horizontal oil and gas production to 2.75 percent with 20 percent of revenue going back to the municipalities where production is happening.
Would increase tax on cigarettes and other tobacco products.
Would increase the Commercial Activity Tax for the first time in its eight year existence from 0.26 to 0.3 percent.
Source: Ohio Department of Taxation.
The current personal exemption of $1,700 would stay the same for those making more than $80,000 annually. But it would increase to $2,200 for earners making between $40,000 and $80,000 and to $2,700 for those making less than $40,000.
But unlike the last round of income tax cuts, which included widening the sales tax net to new goods and services and increasing it by a quarter of a percent, the new plan to lower taxes relies heavily on the hotly debated 2.75 percent severance tax Kasich is proposing for those profiting from oil and gas drilling throughout the state.
The proposal would bump Ohio from the state with the lowest severance tax to the state with the third lowest income tax, still a highly competitive place to be, said Testa. Additionally, Kasich's proposal would send 20 percent of the collected taxes back into the communities from which they were generated.
Currently, none of the 40 companies drilling and producing gas and oil in Ohio are Ohio-based, he added.
"We think this is fair. It's not going to drive people away," said Testa.
But some were skeptical.
Washington County Commissioner Ron Feathers said local municipalities can profit more from the income generated by an unburdened oil and gas drilling industry than they would from a 20 percent kickback on taxes.
"Anytime you want less of something, tax it," said Feathers, indicating that the tax would drive drillers away.
Darlene Lukshin, a community development program specialist with the OSU extension office, said she was wary of the impact of more income tax cuts on local government coffers.
The reductions have inarguably meant less government funding for needs such as fixing township roads and ditches, she noted.
"I just want you to understand, we've had townships that had to implement taxes to make up what they lost," she said.
Testa admitted that the income tax reductions have different implications from place to place, but overall impact will be far reaching.
"The focus is on income tax because the income tax affects us all," he said.
The reductions would total $2.6 billion in reduced taxes over the proposed three-year period.
But if and when those proposed reductions would go into place now rests in the hands of the Ohio legislature, which has broken the budget into several pieces of legislation to be addressed.
While the severance tax had gotten a lot of push back from legislators, Testa said he is confident some form of the tax will eventually make it into law.
"I've got to believe we'll get there. We think this is clearly the right thing to do and we will not give up," said Testa.