COLUMBUS, Ohio — Ohio's proposed income tax cut meant to benefit the middle class isn't helpful and is just taxing, according to advocates on each side of the financial debate.
On Wednesday, the House passed a $95 billion budget, $88 billion of it from the general revenue fund (GRF) and $7 billion of it being one-time GRF, overage money from the current fiscal year.
The budget, House Bill 33, passed 78-19. Seventeen Republicans and two Democrats opposed it.
"We are targeting our tax cut at those who would most benefit from it," said Majority Floor Leader Bill Seitz (R-Cincinnati) before the Wednesday vote.
The budget consolidates the two lowest tax brackets and reduces the amount the individuals in them would need to pay.
Under current law, people making between $26,000 and $46,000 have to pay a tax of 2.765%. Those making between $46,000 and $92,000 have to pay 3.226%. With this proposal, Ohioans making between $26,000-$92,000 would only need to pay 2.75%.
"It would benefit them — but you're talking about maybe $2, $3," Guillermo Bervejillo with Policy Matters Ohio said. "It's actually pretty laughable."
This tax cut barely benefits those who make less than or the median income amount, which is around $60,000, Bervejillo said.
In fact, it actually hurts people with lower income since it removes the adjustments to inflation that are done on an annual basis, he added.
"What that means is that everybody who pays taxes across the board sees a small tax increase," the advocate said. "This Republican Legislature is increasing taxes on the poor."
Conservative groups are also not thrilled with the income tax cut.
"You're only doing a cut for certain folks," Greg Lawson with The Buckeye Institute said. "You're not doing it across the board."
Lawson explained that focusing just on one tax bracket isn’t fair to the higher earners. He wanted a total flat tax of 2.75% for everyone — which is being advocated for in House Bill 1.
"There have been multiple bills over the years introduced to do that or maybe to go down to zero, or what have you, with the elimination," he said. "This particular package, I think, will actually make it harder, in the long run, to be able to do that."
H.B. 1 has had seven hearings so far. Five people have testified in support, 56 in opposition.
A flat income tax actually favors the rich, Bervejillo argued. Paying per income keeps it somewhat fair, he said.
In a study done by Policy Matters, families making less than $30,000 per year will get nothing from a flat tax. Families making $50,000 will see a tax cut of $3 or less. Meanwhile, an individual making half a million dollars per year could see a tax cut of more than $5,000.
The budget still needs to go through the Senate, so both Bervejillo and Lawson hope that their sides get more leverage in that chamber.
Read more from Statehouse Bureau reporter Morgan Trau on the proposed budget:
- 3 decades in the making: Ohio House finally funding public schools, also expanding voucher programs
- Proposal would grant Downtown Cleveland millions for land bridge, revitalization
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