'Good deal' budget bill offers smart tax policy and relief for Ohio families

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2 days ago

As the state's operating budget works its way through the General Assembly, I want to bring to your attention legislation that I've reintroduced with my colleague from Cleveland, Sen. Kent Smith. Senate Bill 190 is a mini-budget bill entitled "A Good Deal for Ohio." It's named in honor of two past presidents and the work they did while in office: Theodore Roosevelt and the "Square Deal"; and Franklin Delano Roosevelt and the "New Deal." This effort is bipartisan and reflects what we believe would be a great budget.
The bill is roughly $2 billion in revenues and expenditures and is, of course, balanced. It raises revenue by revising our tax code to close some overly generous tax loopholes and align other taxes with those of similar states. For example, the business income deduction has been in place for well over a decade. The first $250,000 of business income is tax-free, and it is taxed at a flat 3% above that level. For reference, Ohio's top income tax rate is 3.5%. This tax policy costs the state about $1.2 billion every year.
The change we've made is to simply say that to receive this benefit, you need to materially participate in the business and employ at least one non-owner employee. In other words, you have to create jobs and not be a passive investor. This saves the state hundreds of millions per year and is consistent with many Ohio tax incentives that have a job creation requirement.
Alaska, North Dakota and Texas have either no income tax or a very low income tax. They also have some of the highest severance taxes in the country − a severance tax is a tax on oil and gas extraction. Ohio's severance tax is one of the lowest in the country, and we have a thriving oil and gas industry. These high taxes haven't hampered Alaska, North Dakota and Texas; they're all red states, and their tax regimes exist with at least the tacit approval of Republicans. Moreover, John Kasich tried to increase the severance tax to underwrite an income tax cut. To simply do what these three states are doing will not destroy the oil and gas industry, and it would raise $500 million per year.
There are many other changes on the revenue side, but let's talk about the expenditure side. Consistent with what we've heard from the electorate, the bill would deliver $900 million per year in property tax relief. It would do this by paying for the entirety of bipartisan, property tax "circuit-breaker" legislation: SB 22. It is means-tested, and goes to renters and homeowners alike, irrespective of age. It holds local political subdivisions harmless and is the only property tax relief legislation to earn the support of OASBO, which represents school treasurers.
You should make up your mind on the proposal, but briefly here are the other elements: a refundable earned income tax credit (EITC); universal school breakfast and lunch; a major boost to the Ohio Housing Trust Fund; increases to the local government and public library funds; and an increase to 200% of FPL for initial eligibility for publicly funded childcare.
What has made America and Ohio truly exceptional, and what this legislation supports, is a large and vibrant middle class combined with world-class social mobility. Though the chances of this legislation passing in its entirety are slim, that's not the point. It is to demonstrate what you could have, and serve as a blueprint for the future. To show that this makes better economic sense, as it will drive demand from the poor and middle classes, which will in turn drive business activity to meet that demand, all while strengthening our social safety net. And, finally, to restore faith in our public institutions that, while imperfect, are often the only entities in our corner when we fall on tough times.
Louis W. Blessing III, R-Colerain Township, is serving his second term in the Ohio Senate. He currently represents Ohio's 8th Senate District, which encompasses a portion of Hamilton County.
This article originally appeared on Cincinnati Enquirer: Ohio's budget can be balanced and bold | Opinion