Gov. John Kasich touted his budget plan in Dayton on Tuesday, saying that income tax cuts and exempting some small businesses from income taxes will drive innovation in Ohio and create jobs.
“Starting a small business and sustaining a small business is extremely difficult. Most small businesses don’t make it. What we’re doing is making sure we can breathe some life in,” Kasich said after his speech before a group of business students at the University of Dayton.
Kasich said he wants to do what he can to help small businesses even if it means they get a tax break that other business owners don’t get.
“Small businesses comprise the majority of jobs in Ohio, so the better they do the better people do because people need to get work,” Kasich said. “(Small business owners) also have to live in the community and they also have to pay some other taxes.”
Meanwhile, lawmakers in Columbus began taking aim at some of Kasich’s tax proposals, which calls for offsetting a huge income tax cut with increases in sales taxes, cigarette taxes, oil and gas drilling taxes and the Commercial Activities Tax on businesses’ gross receipts.
Ohio House Rep. Niraj Antani, R-Miamisburg, said much of Kasich’s plan is “laudable” but he called the sales tax “regressive” and said the severance tax increases could lead to job losses at oil companies already coping with declining oil revenue.
Antani also said he is concerned about “tax shifting,” where one tax goes down but others go up. “To pay for (a tax cut) we don’t raise taxes on the poor and the middle class,” said Antani. “We do it by cutting spending.”
Kasich’s budget is a blueprint for spending $138.7 billion in state and federal money over two years. The phased-in across-the-board income tax cut would drop the top personal income tax rate to 4.1 percent, down from 5.33 percent last year. Small businesses with less than $2 million in annual sales would pay no income taxes. The sales tax — which the state increased in 2013 to 5.75 percent — would rise to 6.25 percent under Kasich’s plan
“Governor Kasich’s budget proposal will shift incomes away from families already feeling squeezed in order to give even more tax breaks to the wealthy,” said Ohio Democratic Party Chairman David Pepper in an emailed response to the speech. “We already know that this misguided, trickle-down approach does not work, nor does it face the critical issues facing hard-working Ohioans: fewer jobs, lower paychecks and stagnant wages. This tax shift proposed by Governor Kasich puts more money in the pockets of the wealthy few at a time where many people are working but not being paid a living wage.”
Kasich’s budget also calls for changes in school funding, revamping of human service delivery and a cap on public college and university tuition hikes.
On Tuesday Ohio House Finance Committee members began budget hearings, with Tim Keen, Kasich’s budget director, giving detailed testimony.
State Rep. Mike Dovilla, R-Berea, noted that a half-percentage point increase in the state sales tax rate combined with local sales taxes would push the total sales tax rate to 8.5 percent in Cuyahoga County.
Keen said the increase is offset by a 23 percent cut to the income tax rates.
“We will see what the reaction is back home,” Dovilla responded.
The actual budget bill, which will run thousands of pages, is expected to be introduced next week as hearings continue this week and next, said House Finance Chairman Ryan Smith, R-Gallipolis.
In Dayton, Kasich covered topics ranging from tax cuts to the current national controversy over vaccines.
“You have to get vaccinated,” Kasich said in response to a reporter’s question. “This is not a choice. Are you kidding me? I mean, my kids are gonna go to school I want to make sure that they get vaccinated for those basic things that protect all of us.”
In a speech peppered with anecdotes, Kasich told the students Ohio is becoming the “cool” place to be and they should stay here after graduation, bringing their ideas and energy to a generation of new businesses.
Kasich asked what it would take for the students who planned to leave the state to choose instead to stay. One student from the Chicago area said if his family moved here he would stay.
“And so you are going to live with your mom and your dad?” Kasich asked.
“Not that close,” said the student to laughs from the audience.
“You have feet in your pajamas too?” Kasich said, prompting more laughs. “It’s nice that you want to go back and be with your family,” he added. “Nobody can complain about that. That’s a good thing.”
Kasich said previous state tax cuts enacted in the state are working and Ohio has nearly 300,000 more jobs than when he took office. He also said the state is very close to finalizing a deal with a $1.1 billion company that wants to do cloud computing in Columbus. Kasich would not name the company but in October the Columbus Dispatch reported that he said Amazon wanted to open a data center in Ohio.