Dayton
Daily News...
Editorial: Tax breaks
not free; they put drain on budget
Thursday, June 9, 2011
For weeks now, the news out of Columbus has been about the budget — how
big the cuts are going to be, who is going to be hit.
With a June 30 deadline to pass the next two-year spending plan almost
here, and the House and Senate both having taken their turn at changing
the governor’s proposal, the issue is heading to a small committee made
up of House and Senate members. That’s where the real decisions will be
made.
Though tax revenues have picked up, the hacking still will be severe,
especially for schools, local governments and social services.
One idea that could mitigate the situation at least down the road is a
requirement to take a look at all the state’s tax breaks. That good
suggestion is in the Senate plan, but it needs more force.
The tax department has identified 128 “tax expenditures” — credits,
deductions, exemptions or other breaks — representing $7 billion in
value. By law, these expenditures have to be enumerated every two years
for lawmakers, but there’s no requirement that the legislators then
have to vote to continue them or even debate their merits.
Once a break is on the books, it’s likely to be there forever.
The breaks are given to businesses and individuals alike. They include,
for example, the individual deductions residents get on their state
income tax form and a sales tax exemption for prescription drugs.
Meanwhile, manufacturers don’t have to pay sales tax on machinery,
equipment, supplies and fuel.
Also keep in mind that this tally doesn’t include the money the state
kicks in to reduce the hit homeowners would otherwise take in property
taxes. That subsidy program costs almost a whopping $1.7 billion last
year.
No one is proposing to solve the state’s financial problems by
eliminating all tax breaks. Some of them foster good things. Giving
businesses a tax break for buying new equipment encourages companies to
invest — and create jobs. Helping reduce the sting of property taxes —
which are hard on people on fixed incomes — is good for schools.
But should manufacturers never have to pay taxes on equipment?
Should the state subsidize property tax payments for people who draw
big salaries and own expensive homes?
The push to review the state’s tax breaks is coming from an unlikely
trio — the conservative Buckeye Institute, the liberal Center for
Community Solutions and the liberal Greater Ohio Policy Center.
They don’t agree on what should happen to the money that’s “lost” to
tax breaks; but they do each say that tax breaks shouldn’t be
guaranteed.
Policy Matters Ohio, another liberal research organization which was
among the first to push this issue, and the state chamber of commerce
also say a review is needed.
Gov. John Kasich hasn’t supported the idea, worried that eliminating
any breaks would be portrayed as raising taxes.
“What one person describes as closing a tax loophole another person
calls raising taxes,” his spokesman told one newspaper. “While in
Congress, Gov. Kasich was well-known for taking on inappropriate
corporate welfare, and that commitment continues. I think you’d be
hard-pressed to find too many Ohioans right now who think their taxes
are too low, however.”
Here’s the thing, though. Getting Ohio through this financial crisis
has to be a shared burden. Just cutting spending — without asking if
the state is giving away money it shouldn’t — is not smart.
What’s so awful about having sunsets for tax breaks?
What’s wrong with having targets for reducing the breaks, which is
another way of evaluating which breaks result in the most good?
Making sure that Ohio is collecting what it has coming isn’t selling
out. It’s showing fairness to the people who aren’t getting discounts
on their tax bills.
Read it at the Dayton Daily News
Related News & Opinion...
News
Columbus Dispatch, Budget Analysis… Read it here
Toledo Blade, Harsh Cuts… Read it here
Newark Advocate, Lawmaker Pay Cut… Read it here
Columbus Dispatch, Prevailing Wage… Read it here
Dayton Daily News, JobsOhio Changed… Read it here
Blogs
Columbus Dispatch, Kasich Cleaned It Up… Read it here
Dayton Daily News, Tax Breaks Not Free… Read it here
Chillicothe Gazette, Optional Medicaid… Read it here
Representatatives
From the Senate Majority Caucus… Read it here
Senator Faber's Comments... Read it here
Senator Beagle's Comments... Read it here
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