OHIO SENATE Democrats propose new tax plan
By JEFF ORTEGA
COLUMBUS -- Two Ohio Senate Democrats say they have a better alternative to the tax reform plan contained in the House-passed, two-year $51.3 billion state budget.
Democratic state Sens. Eric Fingerhut of Cleveland and Marc Dann of Liberty say their tax plan, more so than the proposal authored by Republican Gov. Bob Taft, will help jump start Ohio's economy.
"It's a better alternative on the most important factor that matters and that's jobs," Fingerhut said Friday.
"We need a plan for the state that will make it great again," Dann said. Dann said he believes the Democratic plan could help the state add tens of thousands of new jobs across Ohio.
Sales tax increase
The Democrats are pushing a plan that would completely eliminate tangible personal property taxes effective July 1. Fingerhut and Dann propose to replace tax revenue that would be lost to public schools and local governments by making permanent the temporary 1-cent sales tax increase that's set to expire June 30.
Tangible personal property taxes raise about $1.8 billion annually, most of which go to public schools, Fingerhut said. The temporary 1-cent sales tax boost raises about $1.3 billion annually, according to the state.
Under the Democrats' plan, any shortfall between what the sales tax would raise and what would have been raised by tangible personal property taxes would be made up by state general funds to keep schools and local governments from losing revenue, Fingerhut said.
Cuts for business
Fingerhut and Dann are also pushing for an immediate 21 percent income tax cut for small businesses with the requirement that the businesses use the proposed tax savings to reinvest in their companies.
Under the Democratic plan, small businesses could choose to take the proposed tax savings and place them into a special account which could be used only for business improvements.
If the businesses use the funds for improvements within 24 months, the taxes would be forgiven, under the Democratic plan. Otherwise, the funds would revert to the state as taxes, under the Democratic plan.
The move could free up as much as $90 million annually for business hiring and improvements, the two Democrats say.
The senators' plan would also phase out the corporate franchise tax.
The two-year state budget proposal passed by the House Tuesday contained many tax revisions backed by Taft including a proposed 21 percent, across-the-board cut in personal income taxes over five years.
Fingerhut and Dann, who both sit on the Senate Ways and Means Committee, which will consider the tax proposals, say they believe their plan is better than the governor's partly because it doesn't rely on phasing in most of the proposed reforms.
The current, two-year $48 billion state budget runs through June 30. By law, lawmakers must enact a new two-year state outlay by July 1.