by German Lopez
Posted In: News
at 12:14 PM | Permalink
Top 1 percent to get $6,083 tax cut
released June 26 found Ohio’s top 1 percent would get the biggest breaks from
the tax plan included in the final version of the two-year state budget, while the
state’s poorest would pay more under the plan.The analysis, conducted by the Institute on Taxation and Economic Policy for public policy think tank Policy Matters Ohio, shows the tax plan’s slew of tax cuts and hikes balance out to disproportionately favor the wealthy in terms of dollars and percents.On average, the top 1 percent would see their taxes fall
by $6,083, or 0.7 percent, under the plan. The next 4 percent would pay
$983, or 0.5 percent, less in taxes.
Meanwhile, the bottom 20 percent would pay about $12, or
0.1 percent, more in taxes. The second-lowest 20 percent would see their
taxes go down by $5, rounded to 0 percent. The middle 20 percent would
see a tax cut of $9, which is also rounded to 0 percent.
Policy Matters criticizes the tax plan, claiming the revenue should go to other programs, not tax cuts.
“Rather than approving a tax plan that will further shift
Ohio’s tax load from the most affluent to low- and middle-income
residents, we should direct those dollars into needed public services,”
said Zach Schiller, Policy Matters Ohio research director, in a
statement. “That includes restoring support for local governments and
schools, and bolstering human services, from foodbanks to child care.”
Michael Dittoe, spokesperson for Ohio House Republicans,
says the tax plan is supposed to provide an economic boost to almost everyone,
not any specific group.
“The tax plan is going to provide an overall tax cut for
nearly all Ohioans,” he says. “What this plan intends to do is not
disproportionately favor the wealthy at all.”
The broad tax cuts, Republicans claim, should provide a boost to Ohio’s economy that will spur further job growth.
But Schiller argues the tax cut ultimately won’t create
jobs: “A 21-percent cut that was approved in 2005 has not kept Ohio’s
job market from underperforming that of the country as a whole during
and after the last recession.”The tax plan cuts income taxes for all Ohioans and
particularly business owners, but it balances the cuts by hiking sales and property taxes.
Specifically, the budget cuts income taxes for all Ohioans
by 10 percent over three years, gives business owners a 50-percent tax
break on up to $250,000 of annual net income and creates a small
earned income tax credit for low- and middle-income working Ohioans based on the federal credit.
To balance the cuts, the plan raises the sales tax from
5.5 percent to 5.75 percent, increases future property taxes by 12.5
percent and graduates the homestead tax exemption to be based on need,
meaning the lowest-income seniors, disabled and widowed Ohioans will get
the most out of the exemption in the future.
Most recently, the conference committee added two
safeguards for low-income Ohioans: a credit that wipes out income-tax
liability for Ohioans making $10,000 or less a year and another $20
credit for those making $30,000 or less a year.
The Policy Matters analysis doesn’t take into account the
two changes to property taxes and several other, smaller changes to
income and sales taxes, but the rest of the changes, including the conference
committee’s recent adjustments, are considered.
The tax plan is part of the $62 billion state budget for
fiscal years 2014 and 2015, which passed the Republican-controlled General Assembly today. It's expected Republican Gov. John Kasich will sign it into law this weekend.Update: Budget bill passed by General Assembly.Check out all of CityBeat’s state budget coverage:• State Budget's Education Increases Fall Short of Past Funding
• State Budget Rejects Medicaid Expansion• State Budget to Limit Access to Abortion
by German Lopez
Posted In: News
at 01:40 PM | Permalink
Cincinnati Public Schools getting $15 million less than it did in 2009
Compared to the previous budget, the two-year state budget passed by the Republican-controlled General Assembly Thursday increased school funding by $700 million. But the funding
is still $515 million less than Ohio schools received in 2009.
The result: Cincinnati Public Schools will receive
$15 million less in state funding than it did in 2009, joining three in
four school districts who have a net loss to funding between 2009 and
Still, Republicans are calling the funding boost the largest increase to education spending in more than 10 years.
“No school district in the state of Ohio will receive less
funding than current levels,” says Michael Dittoe, spokesperson for
Ohio House Republicans. “Eighty percent of Ohio’s students … are in one
of the school districts that is receiving an increase.”
Stephen Dyer, former Democratic state representative and
education policy fellow at left-leaning think tank Innovation Ohio, says the claim is dishonest
because it ignores longer-term trends in funding.
“It’s like they cut off both of your legs, give you back one of them and say, 'You should thank us,'” he says.
Republicans defend the cuts by citing an $8 billion deficit in 2011, which had to be eliminated under state law. Some of the cuts from that previous budget directly impacted school funding, but the decreases also eliminated subsidies that previously benefited schools, such as tangible
personal property reimbursements.
Dyer says the state budget situation has changed since then. Instead of focusing on tax cuts, he argues state legislators should have prioritized education funding.
Another problem, according to Dyer, is how the increased
funding is distributed. Although Dyer acknowledges the plan is more equitable than the governor’s original proposal, he says some of the most impoverished schools districts, particularly the poor and rural, will get the smallest increases.
Even if there was full equity, Dyer claims there’s not enough money going into education as a result of years of
cuts. To illustrate his point, he gives an example: “If I’m going to go
see Superman with three of my friends and it costs $10 each to get in,
I’ve got $36 and I give everybody $9, none of us are getting in. Even
though I perfectly distributed the money equally, … the fact is none of
us are getting in.”
The budget’s tax changes could also impact future local
funding to schools. As part of the changes, the state will not subsidize
12.5 percent of future property tax levies — something the state does for
current levies. For local taxpayers, that means new school levies will
be 12.5 percent more expensive.
That, Dyer argues, will make it more difficult to pass
future school levies, and that could force schools to ask for less money
if they want levies to get voter approval.
“The legislature and legislators are doing a real
disservice to people to tell everybody that they’re getting an increase
and no one is getting cut,” Dyer says. “They need to be honest with
The budget also increases funding to “school choice”
options, including the addition of 2,000 vouchers for private schooling
that will be available to kindergarten students in households making
less than 200 percent of the federal poverty level.Republicans argue the vouchers give lower-income children access to schools and options in education that would otherwise be unavailable to them.
But a January report from Policy Matters Ohio found the extra
mobility enabled by school choice options hurts student performance and strains
teachers and staff by forcing them to more often accommodate
The $62 billion state budget for fiscal years 2014 and 2015 passed the Republican-controlled General Assembly on Thursday. It’s expected Kasich will sign it this weekend.Check out all of CityBeat’s state budget coverage:• Report: State Budget Tax Plan Favors Wealthy• State Budget Rejects Medicaid Expansion• State Budget to Limit Access to Abortion