Monday, February 4, 2013

Kasich Looks To Lower Income Tax

Tax rate history

Ohio's income tax rates have gradually been falling since 2005. Here's a look at the rates before the 2005 reform, currently and as proposed.
Taxable income 2004 2012 2015
0 – $5,150 0.74% 0.59% 0.47%
$5,150 - $10,300 1.49% 1.17% 0.94%
$10,300 - $15,500 2.97% 2.35% 1.88%
$15,500 - $20,650 3.72% 2.94% 2.35%
$20,650 - $11,250 4.46% 3.52% 2.82%
$41,250 - $82,450 5.20% 4.11% 3.29%
$82,450 - $103,100 5.94% 4.70% 3.76%
$103,100 - $206,250 6.90% 5.45% 4.36%
$206,250 and up 7.50% 5.93% 4.74%
Source: State of Ohio. Note: bracket dollar figures adjusted slighted over the years.

Cleveland Plain Dealer:
Kasich's sweeping tax reform plan calls for a 50 percent income tax reduction for almost every small business over the next two years, and a 20 percent cut for individuals.
The 5.5 percent sales tax rate would drop to 5 percent, but more services would be subjected to the tax, helping to make up for the lost revenue. Service transactions would be taxable unless specifically exempt. Examples of services that would be exempt include health care, education, construction, rental of residential property, social assistance, day care, insurance premiums and residential trash removal.
Other revenue would come from revamping the tax on oil and gas drillers. The new system would eliminate the tax for small, conventional producers, who represent 90 percent of all wells, and convert the current 20-cents-per-barrel tax to a flat 4 percent rate. The administration said the tax still would be the lowest among neighboring states.
The budget contains the first rewrite of Ohio's tax structure since Gov. Bob Taft and Ohio lawmakers approved a 21 percent cut in the state income tax in 2005.
The expansion of Medicaid under the federal Patient Protection and Affordable Care Act, known as Obamacare, will secure coverage for people making up to 138 percent of the federal poverty line -- about $32,000 per year for a family of four.
The move will likely spur contention among Statehouse Republicans who rebuke Obamacare for ballooning government.
Kasich is buying into the Republican war on income taxes and war on the budgets of  working class people.  What is entertaining, though, is how far Kasich has swung from the far right.  His acceptance of the expansion of Medicaid, while maybe an attempt to let the right-wing nut jobs in the Ohio House do his dirty work, shows that he learned a valuable lesson from his defeat on Senate bill 5.  He is positioning himself for re-election and a potential presidential run in 2016 by trying to appear as the moderate centrist.  I think his continued tax cuts are a very bad idea, just like plans in states like Kansas are a bad idea, but at least he learned something from the past two years.

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