Income Tax

Vapor Shop employee John Talmage talks to customers. The price of the liquid nicotine used for e-cigarettes could triple under Gov. Kasich's budget proposal.
Karen Kasler / Ohio Public Radio

Gov. John Kasich’s budget calls for a 23 percent income tax cut. He’s proposing to pay for it with a package of tax increases, including hiking the tax on tobacco products. But at least one segment of that industry says hundreds of businesses could be snuffed out by the plan.

The budget includes $1 per pack increase in the tax on cigarettes, and would raise taxes on other tobacco products as well, says budget director Tim Keen. 

“The proposal is generally to equalize the tax treatment of cigarette, tobacco and related products,” he said.

The state’s tax commissioner took some heat from lawmakers looking over the budget. Lawmakers say they’re hearing complaints from some tax refund filers who are being required to take an identity quiz. 

During questioning before the House Finance Committee, tax commissioner Joe Testa says the state spent $6 million to stop thousands of fake income tax refund requests filed in many states by people who are stealing massive amounts of social security numbers. 

money
401kcalculator.org/Flickr/Creative Commons

A national report by the Institute on Taxation and Economic Policy ranks Ohio 18th in the country for most imbalanced tax systems. In a “regressive” tax system, low- and middle-income people pay a larger balance of their incomes in state and local taxes than high earners. The study finds very few states with “progressive” tax systems, and ranks Washington, Florida, Texas, South Dakota and Illinois as the top five for regressive systems.

City of Springfield

  A tax reform bill passed in the Ohio statehouse Wednesday has lots of city and town leaders riled up. The bill, HB 5, set out to reform local income taxes by adding some uniform regulations, including changing the system for companies that work in multiple municipalities. Right now, municipal income taxes are a patchwork, with different policies in over 600 municipalities around the state.

Dayton's officials are coming up against some unknowns in the budget process for next year.
Derek Jensen

The City of Dayton is starting its budget process for next year. Officials will be dipping into savings again to balance the spending plan.

 

It will cost about $160 million to run Dayton in 2015. That money comes from a variety of sources: income taxes, property taxes and casino revenue. But this year the city will also use $2.5 million in reserves.

Chris Potter / Flickr Creative Commons

Ohio’s looking at an $800 million surplus at the end of its fiscal year, and Republican Governor John Kasich has been touting $400 million in tax cuts in the latest mid-term budget, known as the mid-biennium review.

The governor’s budget update bill includes another state income tax cut – paid for by increases in two existing taxes.

Huber Heights has seen tax revenues decline since the Recession.
Lewis Wallace / WYSO

Huber Heights has announced plans to seek an income tax increase on the November 2014 ballot; the city is predicting budget shortfalls of $2.3 million per year.

“We’ve been using reserves for the past five or six years to provide the services we have out there today, and we’ve come to a crossroads,” says Scott Falkowski, Huber Heights Assistant City Manager.

The House has approved its version of the budget, and now the Senate will make its changes. One idea that’s been suggested by Senate President Keith Faber is to replace the House’s 7% income tax cut for all Ohioans with a 50% income tax cut to small businesses, which had been in Gov. John Kasich’s budget.

Small business owners are salivating at the prospect Ohio might raise up to $1 billion over five years by hiking taxes on natural gas liquids drillers and using the revenue to pay for a general income tax cut.