Ohio taxpayers have had even more reason to celebrate this long 4th of July weekend, knowing that their state income tax rates will be reduced as part of Gov. John Kasich’s recently passed budget. And, hopefully, the long-term result will cause continuing celebration as Ohio creates a stronger economic climate that will lead to greater prosperity for Ohioans.
Our ability to cut taxes for Ohioans is a remarkable achievement given the fact that the state faced an $8 billion budget shortfall when Gov. Kasich took office in 2011. By streamlining state government and reforming costly programs in the governor’s first budget, Ohio was actually able to deliver an income tax reduction in 2011 and totally eliminate the Estate Tax. Two years later, we’re cutting taxes again, by $2.7 billion over the next three years.
Following up on the governor’s commitment to continue reducing taxes, Ohio’s General Assembly worked to cut the personal income tax rate by 10 percent over the next three years and reduce taxes for most small businesses by 50 percent. That good work is reflected in the newly signed state budget, which gives tax relief to virtually every Ohio taxpayer.
Gov. Kasich has long believed that Ohio’s income tax is a burden on all Ohioans and makes our state less competitive for those who do business here or look to Ohio as a place to create jobs. His belief is backed by the facts. Over the last 10 years, the states with no personal income tax performed the best in gross state product, job creation and population growth. This budget takes an important step in that direction and continues his pledge to allow Ohioans to keep more of their own money.
To help Ohio build continuing momentum in creating new jobs, the small business tax cut will help our entrepreneurs hire and expand. Small businesses are the drivers of our economy, making up roughly 98 percent of all Ohio businesses and employing half of our state’s private-sector workforce. Over the past two years, a lot has been done to help small business in Ohio. As a result, Ohio has swung from 48th in the nation in job creation to one of the top job creators in the country.
In my travels across the state this spring, I heard from a number of small-business owners and entrepreneurs who say they’ll use their tax cut savings to grow the size of their business. Some planned to hire a part-time employee, many wanted to invest in a new piece of equipment and others expected to increase marketing to enhance sales. Some I spoke with had earlier been worried about business success, but now welcomed a tax cut to free up capital, help them grow and reach their potential.
Some small business owners state that more important was the message this sends: that we have a governor who appreciates and supports small business and the contribution they make to Ohio’s recovery. As one small businesswoman stated to me, “It’s good to know that we have a Governor who stands behind us.”
Combined, this tax cut in Ohio will pump $2.7 billion into the Ohio economy over the next three years. By any measure – and in the world of economics – this is very significant to growth. Governor Kasich’s vision is to create a more jobs-friendly climate with lower taxes. The end game is the creation of a more prosperous state that has the ability to provide real benefits for every Ohioan.
Joe Testa is the commissioner of the Ohio Department of Taxation