First Posted: 2/27/2015
Sometimes a lot can be said about “reading the crowd” during political speeches.
The fact Republicans sat on their hands instead of applauding during much of Ohio Gov. John Kasich’s State of the State speech last week shows he has a tough sell ahead in pushing his vision for the Buckeye state. That vision seeks a fundamental shift in the state’s tax policy from one that is heavily reliant on income taxes to one more rooted on consumption.
The governor wants to reduce the state’s personal income tax rate from 5.33 to 4.1 over the next two years, while raising the state sales tax to 6.25 percent from 5.75 percent. He maintains Ohio’s income tax rates is a severe drag on economic growth, saying it essentially punishes people who work hard, discourages new investment in the state, and encourages “the best and brightest” residents to leave Ohio for states with no income taxes.
“Many of our most successful job creators, CEOs and innovators leave … and what they do is take their good ideas, their philanthropy with them,” Kasich lamented.
Immediately following the address, GOP legislative leaders said all the nice things you would expect from them. It didn’t last long, however, and a tug-of-war appears to be brewing between the Republican governor and the party’s Republican controlled legislature.
Senate President Keith Faber and House Speaker Cliff Rosenberger, both Republicans, told the Columbus Dispatch they had “serious” concerns about the sales tax plan. On Wednesday, one day after Kasich’s speech, groups including accountants, grocers, manufactures, auto dealers and lawyers lined up before the House Ways and Means Committee to tell why the tax package was a bad deal.
“Businesses believe they will end up paying more,” said Scott Wiley, president of the Ohio Society of CPAs.
Kasich called the special interest groups “inherently short-sighted” during the state of the state address. He also challenged lawmakers.
“I get it that any change in the tax policy is hard. Like barnacles layering up on a pier in the ocean, the special interest cling to the status quo, and any change at all is disruptive to them.”
He pleaded, “Please keep in mind the basics. We have a larger mission than just making some special interest group happy. Our mission is to lift Ohio.”
On other points:
• The governor’s call to raise the tax on oil and natural gas extractions is on target. Ohio’s rate is extremely low when compared to other states. It is unlikely an increase would discourage drillers. As Kasich said, claims made by the Columbus oil and gas lobby that raising the severance tax would bring economic disaster are “a big fat joke.”
• Kasich’s $700 million increase planned for K-12 education isn’t as big as it sounds. It doesn’t take into account the money school districts have lost in the cuts to the tangible personal-property tax reimbursement the state had been paying. That lowers the amount by almost a third, or $230 million, according to school officials.
• The governor’s proposal to raise the state tax on tobacco products and e-cigarettes should help discourage their use.
