Young said such a change would make Ohio “stop penalizing investment and long-term growth.”
“The goal was to make Ohio a more competitive place to invest, grow and thrive,” Young said in a Tuesday press conference at the Ohio Statehouse. “Right now, when someone takes a risk building something, they build it, and it creates value; you tax that success again at the state level.”
His bill comes with a price tag of more than $1.2 billion over the next two years, according to a static model run by the state’s nonpartisan Legislative Service Commission.
Young suggested a more dynamic projection (taking into consideration economic factors and new incentives under the bill) would halve the total potential loss. And, over time, Young said, eliminating taxes on capital gains might bring in more revenue to the state.
“If we want entrepreneurs to build here, and we want retirees to stay here, and we want capital flowing into our communities instead of into the state (pocketbook), we need to act,” Young said.
The bill awaits public testimony from opponents. On the proponent side sits the Ohio Chamber of Commerce, whose Director of Economic Development and Tax Policy Liz Baumgartner told the House Commerce Committee that taxes on capital gains “influence decisions around business sales, succession, and future investment.”
Not everyone is behind H.B. 617. House Minority Leader Dani Isaacsohn, D-Cincinnati, sees the bill as one that helps the wealthy at the expense of the middle class and poor.
“The state has chosen, over and over again, to funnel money to people who need it the least,” Isaacsohn told the Dayton Daily News earlier this month. “This bill is just another example of hundreds (that make) life easier in Ohio for the wealthiest people on the backs of people who are just struggling to get by.”
Ohio has already been taxing capital gains at lower and lower rates as a function of the Republican-led legislature’s longstanding tradition of cutting Ohio’s income tax rates. Recently, the legislature put in place capital gain deductions, too, which benefits investors in certain Ohio-based venture capital companies and those who financially benefit from the sale of ownership interest in a business, according to the LSC.
Republicans don’t see lowering taxes as a bad deal for the state. Here’s what House Speaker Matt Huffman, R-Lima, told this outlet in response to a question about taxes on capital gains earlier this month:
“They typically hurt investment, it hurts economic activity. Like all taxes, the higher the percentage rate, the more it hurts economic activity, the more it hurts job growth — all of the things that economic activity does. That’s why smaller, lower rates not only are better for the economy, like what we just did with the income tax last year in the budget. But ultimately, and this is a little counterintuitive but in fact is true, it produces more revenue for the government."
Huffman suggested that there was probably a tax rate that acts as a sweet spot for capital gains, but ultimately deferred to Young’s leadership on the topic.
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Avery Kreemer can be reached at 614-981-1422, on X, via email, or you can drop him a comment/tip with the survey below.
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