Democrats use income-tax issue to their advantage

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In their zeal to push populist anti-tax buttons, Republicans might have gone too far this time and given their rivals an upper hand in a competitive election year...

Unless Republicans find a way to replace the $7.6 billion the income tax raises each year, there would have to be painful and serious cuts in state spending.

With this in mind, Democrats came to the hearing armed with data. Compiled by the Legislative Service Commission (LSC), the nonpartisan research arm of the Ohio General Assembly, the numbers show the effect of eliminating the income tax on the state's 614 school districts.

Doomsday scenarios

What you are about to read is not reality now, nor is it likely to become reality...

According to the LSC, in the first year of the 10-year phased-in plan, Akron schools would lose $4.7 million and Canton, $2.2 million, which represents 3.8 percent of their state funding.

The doomsday scenarios are better understood when the income tax is completely phased out, which Democrats were savvy enough to project.

State aid to school districts in Summit County would plummet by $266 million, in Stark County by $248 million and in Medina, Wayne and Portage counties by a combined $218 million.

These cuts are based on the assumption that Adams' bill becomes law and no other funds replace the lost income-tax revenue.

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On Wednesday, school officials, officeholders, economists and others paraded before the committee and explained how these cuts would shut down schools, cop shops and fire stations.

Republicans are countering with what can only be considered the single-bullet theory of economic growth.

They believe that cutting income taxes will lead to more money in the pockets of the employed to be spent on more consumer goods that are subject to the sales tax that will fill the coffers of state government. Hard to follow, isn't it?

Well, the math doesn't work and it didn't take long for the line of witnesses to raise pertinent questions about how quickly the sales tax would compensate for the reduced income tax and how high that tax would have to be raised to replace something less than 100 percent of income-tax revenue.

Several witnesses also challenged a Republican ''truth'' — that manufacturing plants have closed and businesses have shuttered because of Ohio's high taxes and rigid regulatory policies.

Other states

Steven Cleaves, Lima's finance director, said he was a conservative who believes in small government, but he cited a study by the auditing firm KPMG that found tax policies are not the primary driver of business relocations.

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''Ohio's job losses are due to lower labor costs for offshore, low-tech manufacturing and [are] due to higher job skill and quality-of-life locations for high-tech jobs,'' Cleaves told the panel.

State Rep. Ron Maag, R-Lebanon, continually asked the key question, although it was clear he didn't like the answers he received. He wanted to know how states that do not have an income tax pay for schools, firefighters and police.

And the answer, as painful as it is for Republicans to swallow, is with other taxes. Florida and Nevada, for example, have tourism, thanks, respectively, to an adorable mouse and the allure of the roulette wheel.

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Some states with no income tax are doing no better than Ohio when it comes to unemployment rates, among them Tennessee.

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Danger ahead

The state already relies on local property taxes — homeowners — to pay for a large portion of the funding for local schools.

If state funds dwindle, then school districts will have to ask local homeowners to support bigger and bigger levies. Phasing out the state income tax is not going to eliminate the need to fund schools. It will only move the bill from one payer to another.

So when House Democrats roll out the doomsday numbers for local school districts, they raise a legitimate question of who picks up the check to educate 1.8 million children in Ohio.

Adams and Republicans have planted themselves smack in the middle of the most contentious issue between state government and local homeowners in the past 30 years....

John Kasich, the Republican candidate for governor, has talked about eliminating the income tax.

Kasich appeared with Adams in Auglaize County a year ago and said the lawmaker ''happens to share the view that I have, that in order to improve Ohio's economic situation, where we've lost 200,000 jobs in the last 12 months, that we have to figure out a way to get rid of the income tax. We think it is harming our ability to attract people to this state.''

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