Policy Matters Ohio: Report to the Ohio Budget Planning and Management Commission
ITEP Work in ActionThe Ohio General Assembly created a Budget Planning and Management Commission to make recommendations on balancing the next state budget. Responding to a commission request for input, Policy Matters Ohio submitted a report to the commission in August 2010. We review the major overhaul of Ohio’s tax system approved in 2005 and the $7 billion in foregone annual tax revenue because of credits, exemptions and deductions known as “tax expenditures.” The 2005 tax cuts did not improve Ohio’s economic performance as promised, increased the share of taxes paid by middle- and low-income taxpayers, and deprived the state of needed resources for public services. Many tax expenditures have continued for decades, draining state revenue and providing a special advantage for certain taxpayers, without an accounting for whether they serve their original purpose or any purpose at all. Based on that, we recommend that we:
– Revitalize the income tax, in particular for high earners
– Restore revenue from business taxes and
– Vigorously attack tax exemptions, credits and deductions that riddle the tax code.