John Kasich and his staff chose the setting of the Mid-Ohio Food Bank for the signing of the mid-biennium budget bill. The governor seized the moment to push a leading theme of his re-election campaign, and a presidential run, possibly, if events come together. He sees himself as shaping the image of the Republican Party, taking steps to make life better for the middle class, working poor and the vulnerable.
“To me, it’s two wings of a bird,” he told those gathered. “It’s the economic growth side, which is about cutting taxes and helping people be rewarded for work, and it’s the other side, which is to help people to get on their feet, help them to grow, help them to have hope.” The bill does include items for those “who sit at the lower end.” It expands the state Earned Income Tax Credit to 10 percent of the federal credit.
The bill also increases the personal exemption under the income tax for those with annual incomes below $80,000.
Yet for all the governor’s words, or the story he likes to tell, the reality is: His tax policies heavily favor households at the upper income levels. The Institute on Taxation and Economic Policy made an assessment for Policy Matters Ohio and found that half of the benefits from the tax provisions would flow to the top 5 percent, or those with incomes above $151,000 a year.
The top 1 percent, with annual incomes exceeding $360,000, will receive an average tax reduction of $1,846. Compare that sum to the average $4 in tax cuts that will go to the bottom 20 percent in household income, or the $24 tax cut for the second lowest 20 percent. Those in the middle? An average $36 tax reduction.
The governor insists, contrary to the evidence, that bringing down the top income tax rate is important — “so we don’t chase our most successful people out of Ohio.” What would make a significant difference for the working poor is a refundable Earned Income Tax Credit, making more Ohioans eligible. Yet the governor and his legislative allies have not given priority to such a step, even though analyses show an expanded credit has the ripple effect of improving the performance of affected children in school.
Give the governor credit. There are provisions that represent steps forward, including new resources for adult protective services and early education. At the same time, let’s not pretend he has been a great supporter of those who are disadvantaged through his tax policies. Be content with reducing income tax rates by 15 percent, instead of closer to one-third, and revenue would be available to invest more substantially in people, through education and other vehicles. But that would require backing away from the thrust of the governor’s first term, providing income tax cuts to those who already are doing well.