State Representative Jim Buchy
Tax Reforms to Alleviate Stress on Household Budgets 

Tax reforms in the new operating budget are meant to help alleviate stress on our household budgets.   In Ohio, we are committed to improving the jobs climate and for that reason we took a series of steps to simplify the tax code and increase transparency.  As a result Ohioans are receiving more than a $2.7 billion tax reduction. 

The FY2014-15 state budget builds on previous successes such as eliminating the Death Tax.  The new package will provide working Ohioans with a $2.7 billion tax liability reduction.  It includes a small business income tax cut of 50% and a 10% income tax cut for working Ohioans.  The state sales tax will be increased by one quarter for every 100 dollars you spend. Transparency is increased by removing the 12.5% state rollback on future property tax levies, which allows Ohioans to track how their tax dollars are spent.  In addition, loopholes have been closed to ensure programs serve their intended purposes. 

Small Business Tax Reduction—Small businesses are responsible for a large portion of Ohio’s economic activity.  A 50% tax reduction on income up to $250,000 will help Ohio small businesses keep employees and hire new ones. 

Personal Income Tax Reduction—The tax reforms are focused on reducing personal income tax because an income tax punishes hard work and reduces your choices in how you spend your money.  The reduction is a 10% tax cut for working Ohioans. 

Sales Tax Changes—Unlike, the original proposed budget, this package does not include any new sales taxes on services.  The income tax reduction will favor economic growth, allowing you to determine how you spend your money.  A slight increase in the sales tax is not enough to dramatically change spending habits, but it enables Ohio to move towards continued reduction of the income tax.  In this case you will be asked to pay an additional quarter for every $100 you purchase worth of goods that are subject to state sales tax. 

Phasing out of the 12.5% Property Tax Rollback—Increasing transparency in Ohio’s tax system was a key goal of the tax reform package. Currently, the state pays 12.5% of Ohio’s property tax levies by using the tax dollars they collect from your pay check.  This is an outdated commitment that has grown from a commitment of just over 61 million paycheck tax dollars in 1970 to over 1.2 billion paycheck tax dollars in 2011 (the most recent figure available). 

The State will Honor Existing Agreements—The state will fund the 12.5% state rollback for existing levies and any passed before the effective date of the measures.  Levies on the August ballot will qualify for the 12.5% roll back. However, levies on the November ballot will not be eligible and any renewal or replacement levies will no longer have the 12.5% rollback. 

Loopholes Closed—In addition to equalizing the tobacco tax on cigarillos, so that sales tax for cigarettes and cigarillos is the same, the new package closes a loophole that extended the Homestead Property Tax Exemption to all seniors no matter their income level.  Elimination of credit for gambling losses has been closed as well. 

Homestead Property Tax Exemption—This exemption was intended to reduce the burden of increasing property taxes on seniors with fixed incomes.  The previous administration allowed the income requirements of the program to expire allowing all seniors to incorrectly receive the exemption.  This package closes the loophole by grandfathering seniors currently receiving the Homestead Exemption and requiring future applicants to have an income of less than $30,000 annually. 

The new tax reforms are meant to lessen the overall tax burden on Ohioans, increase transparency and close loopholes. As always, I appreciate your feedback. One way to efficiently share your thoughts is to fill out my online survey at tinyurl.com/buchyjuly.