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Gov. John Kasich's tax proposal is getting criticism from fellow Republicans
Some GOP lawmakers think problems could arise from Kasich's proposed shift from income taxes to sales taxes

Bill Cohen

Republican Gov. John Kasich’s proposal for a major shift in Ohio’s taxes, as well as an overall tax cut has been the target of criticism from minority Democrats in the Legislature.

Now, it’s getting a lukewarm reception from some key Republicans.

That was evident today at a meeting of the House Finance Committee. There, Democratic and Republican lawmakers alike pressed for details from the man Kasich appointed to head the state tax department.

Statehouse correspondent Bill Cohen reports.

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7190 CoffmanThis and the ideas in it may be quoted
Dublin, Ohio 43217-1032 and attribute to me.
614 889 8282 AAG
To Whom It May Concern:
This is an interim report on Governor Kasich’s complex draconian plan to fund schools and for the 3013 Ohio budget. The details have not been made public, so pendants have not determined all the ways it harms the middle class and poor.

Governor Kasich’s school funding plan and proposed budget appear to be good, but the devil is in the details. It would not return the $1.8 billion he took from schools and relieve the total $4.5 billion tax liability which he caused sub-state entities in his 2011 budget. More peace officers and firefighters would be laid off. “Tax professionals are quick to note that John Kasich’s scheme to create thousands of new taxes to finance a handout to the super rich and friends may have a devastating effect on Ohio businesses.”

The poor and middle class must continue to pay more of the cost of school funding under Mr. Kasich’s plan. Mr. Kasich’s Director of “The 21st Century Budget” stated that we are trying to wean our schools off of dependency on the State.
Mr. Kasich said that school funding is not about politics, it is about educating boys and girls. If it is not about politics, why did he scrap Governor Strickland’s plan to help school funding with state money? That plan made the first step toward complying with the Ohio Supreme Court rulings DeRolph v state, which were handed down in 1994, 1997 and 2002. It states that local public school taxes should not be higher than 15 mils. An unfair merit pay system for teachers is included.

Most of the increase in funds for education is to charter and voucher schools. It is illegal since lottery profit can go to only public schools. The money for charter schools is not accountable and part of it will line the pockets of those managers! “White Hat Brennan” received $10 million during the recent decade and donated $1.2 million to the Republicans law makers who voted to give him the money. Charter schools, on average, rank poorer than public schools. These schools are not unionized, but public schools are. So, teachers unions are undermined. Mr. Kasich’s statement that poor schools would get the most financial help is untrue as details of the plan show. Poor schools get the least per pupil. Sixty percent of school districts, including poor ones would get no additional funding. Most of the funds to schools, is one-time money.
Governor Kasich has made a decision which is very popular with most Ohioans, to accept the Federal Medicaid proposal. It is common sense! His proposal will:
• Improve his chance of his reelection
• Provide medical care for the needy, many of whom are children
• Is paid for by the Federal Government for the first 3 years and 90% thereafter
• Gets back Ohioan’s money back which was paid in federal income tax
Page 2 Proposed Ohio School Funding and Budget for 2013
Right wing Republicans in the legislature are distressed because the Governor recommends financing and expanding Medicaid under Obama Care (The Patient Protection and Affordable Care Act). They are irrationally against it. It is here to stay and will become much more popular with voters each year through 2015 when it will be completely in effect. These very conservative legislators say that the plan does not favor the rich or harm the middle class and poor enough.

The Ohio deficit at the time of the 2011 Budget was about $4.5 billion not the $8 billion which Mr. Kasich stated. The Republicans put $800 million in the rainy day fund and squirreled away about $2.7 billion in hiding places, so the Ohio Income Tax can be phased out. The major cause of our recent deficits is that the progressive State Income Tax was cut of 21% in 2005. This tax plan is like the one passed in 2005. The financial success of our nation was built on progressive taxation.
The 20% reduction in Ohio Income Tax during the next three years also will cost the middle class because of loss of revenue from the wealthy will result in the need to make up this loss. Those with $40,000 income will pay $72.88 less. Those with $206,250 income will pay $977.63 less. Those with higher income will save much more. Representative John Patrick Carney said the 2005 Income Tax cut gave the upper 1% of earners an average of $9,556 and the average family got $180. Carney, “Workforce development and education are better investment. What is the philosophy of on these giveaways to the richest people in Ohio and not investing in things what work?”

Tim Keen the State Budget Director is correct. Capital leads to job creation. That is true, but there is more than $2 trillion in very low interest money available in the U.S. But banks and other lenders will not lend to businesses that needs it. The business must have larger net worth than the loan to get a loan. With an excess of capital available, more will not help the economy or create jobs.

The state sales tax would increases the cost of goods and amenities which are a necessity for a reasonable middle class life style. The poor require some of these services and goods. Putting sales tax on haircuts, cable TV bills, fairs, theater tickets, accountants etc. will stifle the economy and cause the loss of jobs. The cost of collecting, recording and sending in the revenue from the sales tax would be costly for vendors and those who provide service. Enforcement would be expensive if even possible. The incredible truth is that the state budget as planned will control the sales tax rates of counties and cities, forbidding them from increasing for three years. It will cause some rates to be rolled back. This may be unconstitutional in some jurisdictions, since bonds were sold when the tax law was passed. The tax revenue was the collateral for the bonds. Will the broadened sales tax base drive some businesses out of Ohio?

Page 3 Proposed Ohio School Funding and Budget for 2013
Republicans have eliminated the Ohio Estate Tax. So the wealth do not pay that progressive tax. Much of that revenue had gone to local governments. Much of it was used for police and fire services.

Mr. Kasich alleges that the severance tax on natural gas and oil is adequate is untrue when compared to other states. He declares that it will be used to reduce the progressive Ohio Income Tax, results in those with high income to pay their fair share of expenses. The progressive Ohio Inheritance Tax has already been eliminated.

The plan would privatize food service in prisons. Prisoners would be feed cheaper, less nutritious food and the entrepreneur would make big profits. It would sell $ billion in bonds backed by revenue from the Ohio Turnpike for highway improvement. Money for this should be appropriated from Ohio Budget.

Although there will be few dignitaries visiting Ohio next year, the security item in the budget will increase from $6.4 in 2013 to $8.8 in 2014 and $9.5 million in 2015. Much of this is for the Governors personal protection. There is always a State Highway Patrol car in front of his home. A large amount of money has been spent to protect his home. He would not live in the Governor’s mansion.

Republicans always protect the wealthy from paying their fair share of taxes. The proposed budget would put the financial burden on the poor and middle class with income below $100,000. Endorsement by Grover Norquist’s “Americans for Tax Reform” may harm Mr. Kasich’s plans. Most people know that Norquist is against the wealthy paying their fair share of taxes, and all progressive taxation.
Broadcast and print media will do little to let us know the economic and political dangers facing us because they are owned by the wealthy and multinational corporations. MSNBC a cable network and periodicals, The Nation and Mother Jones, impart the facts which then are spread by the ripple effect. Progressives who are well informed must communicate person-to-person verbally and in writing to relatives, friends, acquaintances and everyone they meet, including checkout cashiers, about the treacherous deeds and plans of the Republicans.

Governor Kasich’s insincere benevolence will return to malevolence if he is reelected. His school finance and budget plans are difficult to sugar coat. In a blog on November 24, 2010, shortly after his election, I stated that Governor Kasich would not be able to get elected dog catcher in 2014, and that he would go back to Wall Street where he would make many $ millions more.

Albert A. Gabel
Professor Emeritus
Ohio State University

Posted by: Albert A. Gabel (Dublin, Ohio) on February 13, 2013 2:02AM
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