No state income tax would lead to big problems

Critics are hammering against a GOP-sponsored bill pending in the Ohio House that that would eliminate the state income tax over 10 years.

Amy Hanauer, director of the Cleveland-based Policy Matters Ohio, told the House Ways & Means Committee this week that eliminating the income tax would devastate state government.

The state income tax generated $8.3 billion in fiscal year 2009, which amounted to 45 percent of the general revenue fund money. Without that chunk of money, Ohio could close all the state prisons, end aide to higher education and chop off property tax relief and still have to make more spending cuts, Hanauer said.

The idea that a lower tax rate would spur economic development “is a fantasy,” she said. The tax cuts of 2005 failed to bring relative improvement to Ohio’s economic standing, she said.

Getting rid of the income tax would bring $28 in annual savings to Ohioans earning less than $17,000 a year but result in a $35,490 windfall for the state’s top 1 percent of earners who make more than $309,000 a year, Hanauer said.

Among the 30 co-sponsors of the bill are two state representatives now running for statewide office: Seth Morgan of Huber Heights who is running for state auditor and Josh Mandel of Lyndhurst who is running for state treasurer. It is an idea also supported by Republican John Kasich, who is running for governor.