Tax break for lawyer-legislators restored to Ohio budget
Many of Ohio’s nearly three dozen lawyer-legislators — including leaders in both parties — could benefit personally from a small-business tax break that’s been restored to the state budget.
Most law firms are set up as so-called pass-through entities, which pass the tax burden, or benefit, of the organization through to individual owners or partners.
The Republican-led Ohio Senate restored the proposed tax break targeted at small businesses to the two-year spending plan last week. The Ohio House had stripped the measure out in favor of a statewide 7 percent reduction in Ohio’s personal income tax.
Neither chamber backed Republican Gov. John Kasich’s idea of extending the state sales tax to a laundry list of new professional services, including those provided by legal, accounting and lobbying firms.
Records show 32 of Ohio’s state lawmakers — 21 representatives and 11 senators — are lawyers, including heads of three of four legislative caucuses.
The small-business proposal allows individuals to write off 50 percent of their first $750,000 in business income annually. That could amount to as much as a $22,000 tax break for those in the top bracket. But lawmakers’ relationships to the profession vary, and the tax impact isn’t clear.
“At this time, I’m not aware of this benefiting any lawmakers directly,” said House spokesman Mike Dittoe.
The House is led by Republican House Speaker William Batchelder, a former judge not currently practicing law. The leader until recently of House Democrats, state Rep. Armond Budish, is a partner in his Cleveland-area law firm. He was recently replaced by state Rep. Tracy Maxwell Heard, a non-lawyer.
Dittoe said state ethics law does not prohibit a legislator whose law firm or other small business is affected by the tax exemption to vote on the issue. A bill must have “a definite and particular effect on his personal pecuniary interests,” not broad statewide impact, to pose a conflict.
The Ohio Senate is led by Republican Keith Faber, the principal partner in Faber and Associates in Celina. The Senate’s Democratic leader, Sen. Eric Kearney, is an associate in a Cincinnati law office headed by his wife, Jan-Michele, according to the Ohio Supreme Court’s attorney database.
Faber has touted the plan as an economic boost to Ohio’s small business sector, with more potential for a direct impact on job growth than the statewide income-tax cut Kasich had proposed and which the House partially supported.
Democratic state Sen. Joe Schiavoni, a lawyer-legislator from Boardman, said he owns a small share in his family law firm — but he doubts the tax break will mean more than “a couple hundred dollars” to him as well as to other small-business people.
“Giving business owners an extra $500, $1,000 — even $1,500, $2,000 — that’s not going to make them hire anybody new,” he said.