Thursday, May 04, 2000
Ohio senators plan tax cuts
Value: $345.7 million
By Spencer Hunt
Enquirer Columbus Bureau
COLUMBUS — Ohioans would pay less in income and estate taxes next year under an election-year proposal introduced Wednesday by majority Republicans in the state Senate.
The proposal, endorsed by Senate President Richard Finan, R-Evendale, would raise the personal exemption from $1,100 to $1,600. An exemption is the amount families are allowed to subtract from their taxable income for each member.
The measure also would raise the credit for filing joint returns on a scale that decreases from 20 percent of the total tax for couples making under $25,000 to 5 percent for couples making over $75,000.
Both cuts would help a family of four with a taxable income of $28,000 save $75 in income taxes next year. A same-size family with $60,000 in taxable income would save $100.
The bill also would eliminate the state's share of the estate tax on a deceased person's estate worth up to $675,000. For example, the tax on a $300,000 estate would drop from $11,600 to about $7,420.
All told, the tax cuts would cost the state treasury an estimated $345.7 million next year.
Moderate party leaders had kept a lid on conservative lawmakers' tax relief bills while waiting for a
school-funding ruling from the Ohio Supreme Court. But with lawmakers increasingly focused on their fall campaigns, political pressure to pass tax cuts hit a boiling point.
“Once tax-cut fever begins, it is difficult to stop,” Mr. Finan said. “What we're suggesting here are permanent tax reductions.”
The Senate proposal follows a tax-cut proposal conservative House lawmakers tacked onto a $1.8 billion construction bill that passed Tuesday. The one-time cut would make the state give up more of its surplus budget dollars to guarantee a maximum 5 percent rate cut on next year's income taxes.
Mr. Finan said the House plan could threaten surplus funds the state relies to pay bills filed at the end of the fiscal year.
“We believe this is a more responsible approach,” he said of the Senate proposal.
Savings promised by the GOP plan are not substantially higher than temporary cuts Ohio families receive every year, which are determined based on the amount of the state surplus.
The largest rate cut the fund offered taxpayers, about 9 percent, came in 1998. This year taxpayers got a 3.6 percent rate cut.
Sen. Robert Spada, a Parma Heights Republican, said his proposal is better because the cuts would be permanent. He also said his bill would not stop future temporary cuts in individual income tax rates.
Cuts in the estate tax, meanwhile, would go a long way toward eliminating an expensive surprise some families must confront when a loved one dies, Mr. Finan said.
“I've said all along that I thought the estate tax was archaic and it ought to go,” he said.
The question now is whether Gov. Bob Taft and House members will support the Senate plan.
“We've said that (the House plan) is a starting point for more serious discussions,” said Rep. Jeff Jacobson, R-Brookville, the proposal's chief sponsor.
House Speaker Jo Ann Davidson, R-Reynoldsburg, said the General Assembly might hold off on tax cuts until after the Supreme Court has its say. If the court decides the state does not adequately fund public schools, the state may have to spend some of the money conservative lawmakers want to give back.
“Everything is on the table for discussion,” Ms. Davidson said. “I don't think you're going to see any final decision until after the court rules.”
Mr. Taft also is worried about the Supreme Court.
Said Scott Milburn, the governor's spokesman: “The governor has always said that it's not wise to consider tax cuts until we know the outcome of the school-funding lawsuit.”
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