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JEFF ORTEGA Taft's tax plan could survive Legislature



Published: Mon, April 18, 2005 @ 12:00 a.m.



COLUMBUS -- Republican Gov. Bob Taft's bid for reform of the state's tax structure appears headed for success. Unless the GOP-led Senate makes major changes to the tax-reform pieces in the two-year, $51.3 billion state budget the Republican-controlled Ohio House passed recently, the revisions -- most of it authored by Taft -- appear to be headed for state law.

That's a major change from two years ago when Taft, who's prevented from running for re-election next year because of state term limits, proposed to reform the state's tax laws. The governor had proposed broad tax-reform two years ago as part of his budget package. Some of those reforms were included in the two-year, $48 billion state spending plan that runs through June 30. But many others never saw the light of day.

Last year, the governor continued his call for tax reform as part of his State of the State address to lawmakers and other dignitaries. Lawmakers had been working on a reform proposal but it died as time expired on the two-year legislative session that ended in December.

Now, it's a new year and evidently the right time for the tax reform that Taft says will jump-start the state's ailing economy. Majority House Republicans included much of the governor's tax reform package in the budget measure the lower chamber passed late Tuesday including provisions that would cut state personal income tax rates by 21 percent across the board.

Other Taft-authored tax reform provisions include a move to phase out the corporate franchise tax and replace it with a low-rate tax on business receipts as well as move to phase out the tangible personal property taxes on business machinery, equipment and inventory that some manufacturing companies say harms their businesses. The House took that a step further by including in the phase out the personal property taxes on furniture and fixtures.

Also surviving in the House-passed budget measure is a Taft-proposed reduction of 0.5 percent of the temporary 1 percent sales tax. The provisions survived despite opposition from all but one House Democrat, retail merchants, grocers and the Ohio Chamber of Commerce. So what has changed in the last two years?

Aggressive campaign

For one thing, the governor has been more active in promoting his tax ideas. It's probably been the most aggressive campaign Taft has waged on an issue in his six years in the governor's office. Taft and other members of his administration have crisscrossed the state in recent months preaching of the need for tax reform. The governor and his surrogates have visited communities. They've held news conferences. They've talked to people about the need to change the tax laws.

Groups such as the Ohio Manufacturers Association, which represents more than 2,000 manufacturing companies across the state, and the Ohio Farm Bureau Federation have also been promoting Taft's tax plan. In February, on the same day the governor was to unveil his proposed tax changes in his State of the State address to lawmakers, state officials and other dignitaries, the OMA launched radio advertisements in all major Ohio media markets in support of the Taft's tax plan. For his part, the governor says he believes his current tax reform plan is better than the one he proposed two years ago.

Jobs issue

Also, the state continues to lag the nation in job creation, the governor said.

"It's a lot more clear now," Taft said.

As the proposed tax plan and state budget moves to the Ohio Senate, Senate President Bill M. Harris has said he's committed to the governor's tax plan.

Democrats, deep in the minority in the Senate, could echo the unsuccessful protests of their House colleagues that the proposed tax changes benefit the corporations and the wealthy at the expense of middle-class Ohioans. But ultimately, barring significant Republican defections, it appears that the governor's tax plan could emerge unscathed in the Senate.

What a difference two years can make.

X Jeff Ortega is The Vindicator's Columbus correspondent.




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