Time to review state’s tax expenditures

Published 8:53 am Tuesday, August 2, 2011

During the last budget process, you might have heard a lot of talk about tax expenditures.

Think tank groups with various agendas, from those who want the government to spend more to those who want a flat tax rate, talked about the elimination of tax expenditures.

Tax expenditures are actually tax policy that has been decided in the past to encourage or maintain the economy of the state.

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I have some issues with the term. It presumes that taxpayer dollars belong to the government and that if we allow people to keep more of their own money, that it is a tax expenditure. In my mind, this is wrongheaded thinking.

One of the largest “tax expenditures” is Current Agricultural Use Value, which allows for farmers to pay the agricultural value of property taxes instead of the commercial values.

This makes sense to encourage agriculture, which is Ohio’s number one industry. As my colleague, Representative Jim Buchy says, “Don’t criticize a farmer with your mouth full”—food for thought.

Another tax expenditure exempts packaging from taxation.

Because Ohio is one of the biggest manufacturing states in the nation, this makes sense to me.

But one of the most often-cited abuses of tax expenditures is the assembly of jets.

If Ohio did not have this provision, then the state would lose hundreds of high-paying jobs that do pay taxes and generate income for the state.

Yet another tax expenditure is the state paying the homestead and 12.5 percent of the property tax for each homeowner.

Politically, it is easy to talk about tax loopholes.

When tax reform was worked on in 2006, Ohio had a very high corporate tax rate and very low corporate collections.

The policy was changed to have one low, broad rate. It made sense, but we have to be careful not to make changes that we know will lead to job loss.

After the Tom Noe case, which involved gold bullions, the tax exemptions for gold bullions were removed.

This change led to the loss of many precious metal businesses that either moved to another state or went out of business. Speaker Batchelder and Senate President Tom Niehaus are planning a review of Ohio’s tax expenditures.

While this is necessary and right, my advice is for the General Assembly to proceed with caution.

These things can be tricky, but we have to do what’s best for the people of Ohio.

John Carey serves in Ohio’s 87th District of the House of Representatives, which includes eastern Lawrence County. He can be reached at (614) 466-1366, by writing to: Ohio House of Representatives, 77 S. High St., Columbus, OH 43215, or via e-mail at District87@ohr.state.oh.us.