Report calls into question recent tax changes

Legislators and the governor-elect say they want to give the changes a chance to work.
COLUMBUS (AP) -- A liberal-leaning think tank wants lawmakers to revisit some of the changes the Legislature made to Ohio's tax code over the last two years, saying more money is needed for education and work force development.
However, the Republican-controlled Legislature and Gov.-elect Ted Strickland, a Democrat, want to give the changes a chance to work first.
Policy Matters Ohio, a Cleveland-based nonprofit group, said in a report to be issued today that advancing Ohio's economy hinges on better schools, job training and holding the line on college tuition. Strickland and lawmakers agree but said they won't roll back the tax changes to pay for them.
Inequality among the state's 613 school districts remains one of the main barriers to furthering education or the ability to train for a high-paying job, Policy Matters' report says. That inequity was recognized by the Ohio Supreme Court in 1997, but the Legislature has not done enough to bring poorer districts in line with wealthier ones, the report said.
"The Legislature must determine the cost of providing a high quality education, then fully fund districts for that cost," the report says. "It should raise this revenue through a progressive income tax."
Lawmakers, at the request of Gov. Bob Taft, are reducing the personal income tax by 21 percent over four years.
The report also suggests increasing the state's share of basic instruction costs at Ohio's public colleges and universities to allow the schools to keep tuition from rising faster than family incomes.
However, Senate and House leaders said the new tax structure, which also replaces some business taxes with a broader tax on company revenues, is too delicate to tinker with in any way.
"Most of that sounds like it would unravel everything," said Rep. Larry Flowers of Canal Winchester, the No. 3 Republican in the House.
Senate President Bill Harris, an Ashland Republican, said the effectiveness of the tax changes won't be known until they are fully implemented over the next four years.
"We need to continue to monitor and watch and work through the implementation of the tax plan that we passed, and there's a lot of that that's yet to be completed," Harris said.
Strickland, who takes office Monday, has said he would not seek any tax changes until the current structure was settled.
"He has said throughout the campaign that sufficient time needs to be given to allow the tax reforms to work," campaign spokesman Kevin Dailey said.
Policy Matters also called for curtailing tax breaks for relocated or new businesses and putting that money into work force development.
While job training remains a legislative priority, it won't come at the expense of business development, Harris said.
"The tax breaks have very specific reasons. I think we need to allow those to work out. But where we think we can help in other ways, especially in work force development, we'll do it," Harris said.

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