Gov. John Kasich says he’s cutting everyone’s taxes in his 2014-2015 budget, but an analysis released Feb. 7 found the plan is actually raising taxes for the poor and middle class. The Policy Matters Ohio report reveals the poorest Ohioans will see a tax increase of $63 from Kasich’s budget plan, while the top 1 percent will see a tax decrease of $10,369.
For the poorest Ohioans, the new tax burden comes through the sales tax. On average, the bottom 20 percent of the income ladder will have their income taxes reduced by $8, but the sales tax plan will actually increase their average sales tax burden by $71.
The middle 20 percent fares slightly better.
Under the budget proposal, they will get a $157 income tax cut on average, but their sales tax burden will go up by $165 — meaning they’ll end up paying $8 more in taxes.
The top 1 percent get the most out of Kasich’s tax plan. Their income taxes will be reduced by a whopping $11,150. They do see the highest sales tax increase at $781, but it’s not enough to make up for the income tax cut.
Kasich says his budget is all about creating jobs, but the regressive plan defies economic research.
Previous analyses from the Congressional Budget Office and Congressional Research Service, which measure the budgetary and economic impact of federal policy, found tax cuts for the wealthy are economically unproductive compared to other programs.
Kasich’s plan proposes cutting the state income tax by 20 percent across the board and lowering the sales tax from 5.5 percent to 5 percent.
To pay for the cuts, the proposal broadens the sales tax so it applies to additional services — including cable TV services and admission to sports events — while keeping exemptions for education, health care, rent and residential utilities.