Wednesday, May 17, 2000
Income tax cut dumped in Ohio
New focus: Property and estate taxes
By Spencer Hunt
Enquirer Columbus Bureau
COLUMBUS — House and Senate Republicans abandoned a package of proposed income tax cuts Tuesday and advanced a plan to reduce property taxes.
The change in direction comes in response to the Ohio Supreme Court, which Thursday found the state was not adequately funding schools and relied too much on local property taxes.
Faced with spending billions more on education, Senate President Richard Finan, R-Evendale, trashed a bill that would have cut $265.7 million in state income taxes through increased personal exemptions and joint-filing credits for married couples.
House GOP leaders also dropped a plan that would have spent up to $380 million in surplus budget funds on a 5 percent income tax rate cut.
The two tax-cut proposals legislative leaders dumped Tuesday would have helped
families save between $75 and $160 a year on their state income taxes.
A less-expensive proposal that would have cut the state inheritance tax by 36 percent may still be adopted.
“Property tax relief is still alive,” Mr. Finan said. “The estate tax (cut) is still alive.”
A specific plan to do both could emerge in the Senate as early as today, Mr. Finan said.
One possible property tax proposal would use surplus dollars to increase the percentage of school property taxes the state already pays — from 12.5 percent to 16 percent.
While such a cut would be temporary, House Speaker Jo Ann Davidson, R-Reynoldsburg, said lawmakers would look for ways to make the increased property tax rollback permanent next year.
A typical homeowner's savings under the proposed 3.5 percentage point property tax rollback was unavailable Tuesday. The plan could cost the state $200 million a year.
Ms. Davidson and Mr. Finan said they still back an effort to slash the inheritance tax the state and local governments levy against a deceased person's estate. The measure would eliminate the state's portion of the death tax on estates worth up to $675,000, which amounts to a 36 percent cut.
The proposal would cost the state about $80 million. If the plan is approved, the tax on a $300,000 estate would drop from $11,600 to about $7,420.
Conservative lawmakers who had hoped to pass a permanent income tax cut said the Ohio Supreme Court decision forced them to shift their focus to property taxes.
Justice Alice Robie Resnick's majority opinion scolded the General Assembly for doing nothing to reduce the state's reliance on local property taxes as schools' main source of funding.
Sen. Scott Nein, R-Middletown, was one lawmaker who supported the income tax cuts before the court ruling. He now says property tax relief is a good substitute.
“If we can reduce the property tax burden in combination with doing something about the inheritance tax, that's a good step in the right direction,” he said.
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