Ohio Budget plan spares rich of the worst

[irishbobcat]

Kasich and The GOP off course let the RICH off scott free........


Budget plan spares rich of the worst
Kasich, GOP defend it, but tax cuts, end of estate tax among provisions favoring wealthy
Monday, June 13, 2011  03:07 AM
By Joe Vardon

THE COLUMBUS DISPATCH


Talk of "shared sacrifice" was in the air last week as the Ohio Senate approved the $55.7 billion state budget.

But in a spending plan that whacks schools, local governments, higher education, nursing homes, day care for children of low-income parents, the Ohio Consumers' Counsel, children's hospitals and work-support programs for the poor, one group was notably exempted from the pain.

Ohio's biggest earners.

Republicans who control the legislature filled an $8billion shortfall without raising state taxes for anybody, an accomplishment many thought unlikely.

Story continues belowAdvertisement  But they eliminated the estate tax beginning in 2013, which affects only the top 8percent of estates. When the Senate restored $85million in school-funding money, the lion's share went to more-affluent districts.

And the two-year budget incorporated the final portion of state income-tax cuts begun in 2005, with the largest dollar reductions going to those with an annual income above $200,000, who contribute about 25percent of all income-tax dollars going to the state.

While the percentage cuts are the same for all, the $200,000-plus Ohioans could take home an estimated average of about $950 from that tax cut, while those in the most-common tax bracket - making about $40,000 to $80,000 - get about $80.

"Lawmakers and the governor in Columbus have made it clear they're going to take care of rich people," said Jack Frech, job and family services director in Athens County.

When asked how the rich are being asked to sacrifice in the budget that his chamber would pass a few hours later, Senate President Tom Niehaus searched for an answer last week before citing the state income-tax cuts, which took effect in Strickland's final days.

"There are no specific policies targeting the wealthy, but as taxpayers of the state of Ohio, they suffer along with the rest of us," the New Richmond Republican said. "Some might argue they suffer less, but they still suffer along with the rest of us, whether it's in opportunities that exist, and inability to expand businesses in a tough economic climate."

When House Speaker William G. Batchelder, R-Medina, was asked about the burden on the rich, he gave a long reply that didn't answer the question.

However, Gov. John Kasich did have a response for sparing the rich.

"What we've been doing is driving successful people out of Ohio, which has put Ohio in a ditch," Kasich said. "I don't know why we would want to punish success in Ohio."

Ken Mayland, president of Clearview Economics, an economic-forecasting company in Cleveland, said preserving the income-tax cut and eliminating the estate tax are both "arguably good economic policy."

Mayland said he was "under no illusions that it's easy to cut spending."

Speaking specifically on the estate tax, Mayland said "what's lost in the shuffle is that there are people who will move out of the state because of it."

Zach Schiller, research director at the liberal nonprofit Policy Matters Ohio, released a report last week that favors keeping the estate tax - which is a 6 percent tax on estates worth more than $338,333. The tax is 7 percent on estates worth more than $500,000 and is paid when assets are transferred after someone dies.

Schiller said the tax generated $231 million for local governments and $55million for the state's general fund last year, and he contends that the notion Ohioans leave the state because of that tax is false.

Schiller also told The Dispatch that he is in favor of a rollback of the income tax for Ohio's top earners - a proposal he concedes would be dead on arrival to Kasich's desk.

"Given the scope of the cuts, the slashing of funds to local governments and human services, there is not the kind of sacrifices being asked of the affluent that others in Ohio are going to experience," Schiller said.

Kasich insists that the budget he proposed March 15 was pieced together without political considerations.

When asked what sacrifices he was asking the rich to make, Kasich said "you may be asked to give a little more for your schools," referring to his budget formula - later changed by the Senate - that applied the largest funding cuts to the state's wealthiest schools.

The House and Senate added a combined $165million in operating money to ease school-funding cuts, much of that directed at wealthier, suburban districts.

The Senate also added a $17 per-student bonus for schools rated "excellent" or better, totaling about $28 million over two years. An analysis by education advocacy groups found that two-thirds of that money would go to districts the state classifies as high wealth.

To further illustrate that he has been judicious in fiscal policy, Kasich pointed to grant money he's clawed back from businesses that failed to meet promises to create a certain number of jobs in return for state funds about $1.6 million from 12 companies.

The governor also cited the creation in the budget of a commission to study closing some corporate tax loopholes that cost the state millions of dollars.

Senate Republicans also inserted into the budget a 5percent pay cut for most lawmakers beginning in 2013 (the rest in 2015). They called that a gesture of "shared sacrifice" to people throughout the state affected by budget cuts.

Frech, the director of Athens County's Department of Job and Family Services, runs programs for the poor in a county with a 33percent poverty rate. He said he hasn't seen any attempts at true shared sacrifice.

Frech said his department laid off 25 employees two years ago because of dwindling funds, and it may lay off 20 more this year because of the $1.2million cut in state aid slated for his department.

In Appalachian communities such as his where high-paying jobs are scarce, Frech argues that tax cuts when state budgets are tight do more harm then good.

"They consider themselves to have done a great job because they haven't raised taxes and they didn't cut human services as much as they could have," Frech said. "But they're bad. They're terrible. There are people struggling to survive out there every day."