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Debate Hovers Over State Budget's Benefits For Poor

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The income tax cuts written into Ohio’s new two-year budget have been criticized as favoring wealthy Ohioans and hurting low wage workers. The state’s tax commissioner defended those cuts – and budget -- today on 90.3’s The Sound of Ideas program. ideastream’s Brian Bull reports.

Monday, July 1, 2013 at 5:11 pm

Over the next three years, the state budget phases in a personal income tax cut that eventually tops out at ten percent.

Sales tax will rise a quarter percent, and small business owners will see taxes drop by 50 percent on $250,000 of income.

State Tax Commissioner Joe Testa says those changes are beneficial for everyone, and make the state more competitive. He says Ohio will continue to tax wealthier Ohioans more than lower wage workers, and he refutes claims that the new budget disproportionately gives affluent ones a break.

“There’s a lot of features in this budget that are focused on the lower income people and help them dramatically. “

Testa says low-income workers benefit from things like a $20 credit on the personal income tax, and a new Earned Income Tax Credit that goes into effect with the new budget.

Amy Hanauer with the left-leaning group Policy Matters Ohio says despite those provisions, low income Ohioans do not benefit from the tax changes. She says they still pay a greater share of their earnings than wealthier people, and don’t, in the end, get a tax cut.

“The top 1 percent are going to get a more than $6,000 tax cut under this plan, and the lowest income Ohioans are going to be paying $12 more in state and local taxes.”

The budget is now in effect. Testa says the changes will bring taxes down overall by $2.7 billion.

ideastream's Michelle Kanu contributed to this report.

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