Gov. John Kasich says he’s cutting everyone’s taxes in his 2014-2015 budget, but an analysis released Thursday found the plan is actually raising taxes for the poor and middle class. The
Policy Matters Ohio reportreveals the poorest Ohioans will see a tax increase of $63 from Kasich’s budget plan, while the top 1 percent will see a tax decrease of $10,369.
For the poorest Ohioans, the new tax burden comes through the sales tax. On average, the bottom 20 percent of the income ladder will have their income taxes reduced by $8, but the sales tax plan will actually increase their average sales tax burden by $71.
The middle 20 percent fares slightly better. Under the budget proposal, they will get a $157 income tax cut on average, but their sales tax burden will go up by $165 — meaning they'll end up paying $8 more in taxes.
The top 1 percent get the most out of Kasich’s tax plan. Their income taxes will be reduced by a whopping $11,150. The top 1 percent do see the highest sales tax increase at $781, but it’s nowhere near enough to make up for the massive income tax cut.
Kasich says his budget is all about creating jobs and spurring the economy, but the regressive tax system defies economic research. A previous analysis from the Congressional Budget Office (CBO), which measures the budgetary and economic impact of federal policy,
foundletting tax cuts expire on the wealthy would barely dent the economy. The same report also found the economy greatly benefits from tax and social welfare programs that disproportionately benefit the lower and middle classes.
also concludedtax hikes on the rich would have negligible economic impact. The findings made national Republicans so angry that they pressured CRS to pull the report. CRS later
re-released the study— except this time it had nicer language to appease politicians that can’t handle reality.
Kasich’s plan proposes cutting the state income tax by 20 percent across the board and lowering the sales tax from 5.5 percent to 5 percent. To pay for the cuts, the proposal broadens the sales tax so it applies to additional services — including cable TV services, coin-operated video games and admission to sports events and amusement parks — while keeping exemptions for education, health care, rent and residential utilities.
For more analysis of Kasich’s budget, check out CityBeat’s other coverage: