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Tax cut more about politics than policy

Given that an Ohio income tax cut is the marquee item in Republican Gov. John Kasich’s mid-biennium review (House Bill 472), early debate understandably will focus on that.

But the bill — which is as big as a phone book — also would rework numerous state policies and endeavors, and those components of HB 472 deserve as much debate as taxation….

Kasich’s education and workforce initiatives deserve overwhelming approval….

Now to the proposed tax changes, which include some good ideas that are, unfortunately, overshadowed by the big, bad idea of an income tax reduction.

An income tax cut supposedly would spur Ohio’s economy. There’s scant evidence for that. A backup argument: Ohio’s stated income tax rates (regardless of effective rates) deter investments in the state.

The actual problem is that Ohio has a whole galaxy of income taxes that municipalities and school districts charge. The only way to tamp those down is with more state aid — which Columbus has pruned back….

Meanwhile, it appears Kasich wants to adjust the income tax based more on possible publicity effects outside Ohio — to draw capital to the state — rather than on possible economic effects inside Ohio. But flat-lined state revenues don’t help localities in need….

Much of HB 472 promotes forward-looking policies, including a fair severance tax regime and a cigarette tax that discourages smoking.

But the income tax cut Kasich wants seems more about politics than policy. And that’s one of many reasons why the income tax cut is a bad idea.

 

The (Cleveland) Plain Dealer