One of the most interesting things about the state budget is that it includes such a vast array of subject matter, it truly allows you to fit many different pieces of a puzzle together and achieve overall reform in how our state operates. The members of the House began that process two years ago, when we pulled Ohio out of its $8 billion structural deficit and made various changes to get Ohio’s economy moving, including the elimination of the death tax.
The new state operating budget that was recently signed into law by Governor Kasich furthers our efforts—reducing the tax burden on small businesses and cutting the income tax rate so that Ohio can have an economically competitive environment that is friendly toward jobs for our communities. Shifting away from the income tax toward consumption-based revenue is a change that I hope all Ohioans can agree is more desirable. While the income tax penalizes your success, the sales tax is more fair because you have the ultimate say on how much you purchase.
The budget just enacted applies to fiscal years 2014 and 2015, and it provides $2.7 billion in tax relief for Ohioans during the next three years. This includes a 50-percent tax cut for business owners on the first $250,000 in net income, as well a personal income tax cut of 10 percent in three years for all Ohioans. These changes will surely help job creators invest so that they can hire more Ohio workers.
Because of the tax relief mentioned above, Ohio can move away from its overreliance on the income tax, which harms economic growth. Instead, we are heading toward a system based more on consumption, so the budget includes a sales tax adjustment from 5.5 percent to 5.75 percent. Additionally, our state will expand its collection of sales tax that out-of-state companies already have due under Ohio law.
On top of all this, the budget makes further efforts to modernize the tax code by closing various loopholes that could already be found in law. Many of these are unnecessary and unjustifiable. Examples of our changes include eliminating the gamblers’ losses deduction, equalizing taxes on cigarettes and cigarette-like products called “cigarillos,” and equalizing the taxes between digital and tangible items such as books and magazines.
How to update Ohio’s tax code has long been debated, and I have no doubt that more changes will come in the future. I’m proud of the work that has taken place on the state operating budget, and Ohioans should have little doubt that the tax revisions that were included in it will allow businesses to expand and hire more Ohio workers in the coming years. Our state has already seen recent success, but more is to come. At the end of the day, providing for the economic prosperity of Ohio residents should remain our top priority, and this budget is one more step in that direction.