Toledo Blade...
Reform Ohio’s tax system
By Matt Mayer, John Begala, and Lavea Brachman
6/21/11
Our
three groups often take different approaches to addressing the
challenges that face Ohio. Yet we have joined forces over the issues of
tax expenditures — exemptions, deductions, credits, and exclusions —
and tax reform.
We propose bringing common sense to
our state’s tax system. Three specific changes would contribute to
substantial improvements in Ohio’s tax climate.
First,
we urge the repeal of specific tax expenditures in the 2012-13 budget
that takes effect July 1. Our list would yield more than $300 million
in yearly tax revenue without changing tax rates.
The
list includes special tax breaks for aircraft owners, the $50 property
tax credit for older Ohioans, and the tax write-off Ohioans get for
political donations. All of these breaks are expensive. None is good or
fair public policy.
Tax expenditures are usually the
equivalent of a state grant or other form of financial aid to subsidize
a specific activity or group. The use of tax expenditures has
proliferated for decades at state and federal levels.
Yet
once these exceptions become law, they rarely get the same kind of
scrutiny as spending on programs through the budget appropriations
process. They generally have no performance measures to show whether
they are achieving their intended purpose.
To remedy
that omission, we propose subjecting tax expenditures to “sunset”
provisions. They would end after eight years unless the General
Assembly re-enacts them and the governor approves them. We call for the
creation of a committee that would review tax expenditures and make
recommendations to lawmakers.
In the longer term, Ohio
needs a nonpartisan commission to study state and local taxation in
Ohio. This commission should be broadly framed, to provide a diverse
and representative body of well-informed citizens. It should exclude
state and local elected officials and senior public executives.
The
commission would recommend ways to align taxation better with the roles
and responsibilities of state and local governments, including
special-purpose agencies. To insulate the commission’s work from the
political cycle, it would make its final report in the last six weeks
of 2012.
Ohio’s tax system must allow enough
flexibility to address evolving economic and social circumstances, such
as the transition from manufacturing to services and the population
shift from large central cities to suburbs. It also must provide
adequate and stable funding for public services.
Individual
taxpayers and our corporate citizens must share Ohio’s tax burden in a
manner that is broadly, fairly, and equitably distributed. Such a
system, we believe, will contribute to economic vitality and the
quality of life in Ohio.
The combined effect of state
and local taxes in Ohio is a significant consideration for tax fairness
and adequacy, as well as the overall business climate of the state.
With more than 3,500 local taxing jurisdictions, the web of local
taxation in Ohio is among the most complex of the 50 states.
Groups
rank Ohio’s state and local tax burden between 16th and 18th highest
among states. That ranking reflects an overall pattern of relatively
low state taxes but relatively high local taxes.
Our
agreement on these proposals does not extend to alternative uses of the
tax revenue this plan would produce. The Center for Community Solutions
proposes increasing appropriations for community behavioral health
services, PASSPORT services for older adults, and protective and early
childhood development services.
The Buckeye Institute
prefers a neutral tax impact by reducing tax burdens on small and
medium-sized businesses to spur
jobhttp://www.toledoblade.com/Op-Ed-Columns/2011/06/19/Reform-Ohio-s-tax-system.html
creation. Greater Ohio views tax reform as essential to promoting and
removing barriers to local and regional governance reform, to foster
growth and economic redevelopment.
These differences,
however, do not detract from our agreement on setting the stage for a
new round of tax reform. If our disparate policy groups can reach
agreement, our elected officials can too.
For Ohio’s sake, we hope they do.
Read it at the Toledo Blade
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