In 2011, in an effort to make Ohio’s government smaller, more efficient, and more effective, Gov. Kasich worked with the General Assembly to enact his fiscal year 2012-13 budget. This budget cut taxes, streamlined regulations, and reformed government.
In mid-2014, the administration conducted a Mid-Biennium Review (MBR), which resulted in a package of bills that sought to initiate reforms to state spending, agency operations, and state policies and programs.
The main component of the MBR was House Bill 483 (HB483). According to a press release issued by State Representative Robert Sprague (R-Findley), who joined the governor for the bill signing, HB483 enacted several tax cuts and new tax relief for low- and middle-income Ohioans. This included $400 million in tax relief for tax year 2014, incorporating the following:
- $175 million for individuals by accelerating the income tax reduction.
- $225 million in tax relief for small businesses through a one-time increase of the small business tax credit.
More specifically, the state of Ohio reports that Ohioans’ taxes have been cut by more than $3 billion since Gov. Kasich took office in 2011, through the use of these initiatives:
- Cutting small business taxes in half: Building on the 50 percent small business tax deduction enacted in 2013 (50 percent on the first $250,000 in small business income), the personal income tax deduction on small business income will increase temporarily to 75 percent for the tax year 2014.
- Eliminating the death tax, also known as the estate tax, as of Jan. 1, 2013: When Gov. Kasich enacted his budget that killed the death tax, Politifact.com reported that its elimination affected the seven percent of estates in Ohio that are valued over $338,333, and that it funneled about $250 million a year to local governments and $60 million to state coffers.
- Accelerating the 10 percent personal income taxes reduction: Initially scheduled to take effect in 2015, the one percent cut in the Ohio income tax rate was made retroactive to January 2014. Combined with the reduction of income tax withholding rates that began in July 2014, these two changes give taxpayers a 10 percent income tax cut in 2014 that was not originally scheduled to go into effect until January 2015.
- Doubling the Earned Income Tax Credit (EITC): Ohio doubled the EITC for low income Ohioans by increasing its benefit from five percent to 10 percent of the federal credit.
- Cutting low and middle income taxes: For families earning less than $40,000 per year, the budget increases the state income tax personal exemption from $1,700 to $2,200. For families earning between $40,000 and $80,000, the exemption increases from $1,700 to $1,950.
In a fact sheet touting the MBR results as of Aug. 21, 2014, various agencies attributed numerous benefits to Gov. Kasich’s budget, in these key areas:
- New business creation: In 2013, 89,735 businesses were created in Ohio, the most in state history. Through Aug. 21, 2014, Ohio is ahead of 2013's record-breaking pace, having created 56,176 new businesses.
- Job creation: Ohioans have created 245,000 new private sector jobs since Gov. Kasich came into office in January 2011.
- Job retention: Initial claims for unemployment in 2013 were the lowest since 2000. In addition, year-to-date numbers in 2014 reflect the fewest first-time jobless claims on record going back to 1987 through the same time period.
- Unemployment reduction: Since January 2011, Ohio’s unemployment rate has dropped from 9.1 percent to 5.5 percent, and the number of unemployed Ohioans has decreased from 527,000 in January 2011 to 323,000, a 39 percent decline.
In what is to be a series of articles titled "Axing Ohio's income tax: What would it take?", The Plain Dealer has begun to report on the affects of Gov. Kasich’s ultimate goal, which is to eliminate the state’s income tax altogether. This would reduce state revenues by about $8 billion a year. The paper’s series will explore what the state would need to do to achieve the governor’s goal.