(Columbus) - Republican lawmakers have unveiled a sweeping tax change that they say will put more money in the pockets of Ohioans and shift the state's tax system to more consumption-based instead of income-based.
"We're closing tax loopholes. We're trying to create a flatter and fairer tax system that benefits all Ohioans," said Ohio Senate President Keith Faber.
Under the plan, Ohioans would see a gradual income tax reduction over three years, beginning with an 8.5 percent cut in the first year. It increases to 9 percent the second year and 10 percent the third.
The proposal also gives small businesses a 50 percent tax break on the first $250,000 earned and increases the state sales tax from 5.5 percent to 5.75 percent.
"This is sustainable. This is balanced and it does not rely on one-time money," Faber said.
The plan also makes changes to the Homestead Exemption. Under the administration of Gov. Ted Strickland the exemption was given to all Ohio seniors. That would only be given to seniors who have an income under $30,000. The change would be phased in and wouldn't impact current seniors.
Republicans are also closing several tax exemption loopholes. You will no longer be able to deduct gambling losses and all tobacco products would be taxed at the same rate. Exemptions would also be eliminated for digital music and book sales.
Senate Finance Committee Chairman Scott Oelslager (R-North Canton) says the idea is to give Ohioans more money to spend.
"And what does that do then? That spurs economic growth in this state and ripples out across the whole state," he said.
Democrats are quickly taking aim at the plan.
Their tax scheme will still disproportionately help the most affluent Ohioans at the expense of good schools and safe streets for the rest of us. The nominal gains Ohioans will see in their paychecks will not offset the inevitable increase in local taxes," said Sen. Nina Turner (D-Cleveland).
"Tax cuts do not make investments critical to economic growth. Its a wasted opportunity that could have been used to build a foundation on which the next generation of Ohioans can flourish," she said.
Turner also blasted Republicans for introducing the plan just 10 days before the June 30 deadline to pass an almost $62 billion state budget.
All Ohioans will have to pay higher taxes every time they go to the store or buy a car thanks to this Republican tax hike. This plan is the continuation of a GOP tax shell game that benefits the wealthy at the expense of everyone else. It is simply unfair," said Senate Minority Leader Eric Kearney (D-Cincinnati).
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