Ohio House GOP leaders plan to add a state personal income-tax cut to the state’s multi-billion-dollar budget plan, paid for by reducing tax breaks on things like business income, film productions, and corporate jets.
Ohio House Speaker Larry Householder, speaking with reporters Wednesday, didn’t say precisely how much the proposed personal income-tax cut would be, as lawmakers are still working on the final plan. But the Perry County Republican said he expects the plan would have a “pretty significant” effect on the bottom income-tax brackets.
Almost every state budget plan since 2005 has included an income-tax cut. In particular, ex-Gov. John Kasich pushed for such cuts, arguing they would help the state’s economy, though critics said they disproportionately helped the wealthy.
To pay for the personal income-tax cut, Householder said the tax plan would reduce the amount of business income that Ohioans can write off, from a taxpayer’s first $250,000 of income to $100,000.
While the tax break helps small businesses, Householder said, allowing a tax reduction of up to $250,000 means “we’re probably taking care of some folks who are putting it in the bank or putting it in their pocket.”
Democrats and liberal-leaning groups have made similar arguments against the business income-tax reduction, which was passed in 2015.
Householder said the budget rewrite would also alter the current 40-percent tax cut on business income above $250,000, though he didn’t give specifics.
The speaker said the personal income-tax cut would be paid for in other ways as well, including slashing Ohio’s decade-old motion picture tax credit, a $40 million-per-year pool of money used to encourage movie studios to shoot films in Ohio.
Other tax cutouts on the chopping block include a break for co-owners of corporate jets.
There have been efforts during past legislative sessions to cut various state tax expenditures, but most have been shot down.
When Householder was asked whether he expects he’ll be more successful this year, he replied, “We’re going to find out.”
Gov. Mike DeWine said Tuesday that he spoke with Householder about the tax proposals and was “open to ideas.”
House Minority Leader Emilia Sykes, an Akron Democrat, said she has talked with Householder in the past about the so-called “LLC loophole,” which is what critics call the business income-tax write-off.
She said the business write-off was a giveaway for high-wage earners.
The state’s taxation scheme “is rigged against working people and we need to fix it,” Sykes said. “In addition to the fact the LLC is a billion dollars we could use for funding our schools, Medicaid, our infrastructure, water quality, and I could go on and on.”