LOVELAND MAGAZINE

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Since 2004

Tag: Policy Matters

  • Ohio tax breaks adding up, watchdog says

    Ohio tax breaks adding up, watchdog says

    Loveland, Ohio, and Columbus

    Part of the incentive package offered to Intel by the state of Ohio. (Screenshot from Ohio Dept. of Development presentation)

    BY:  – Ohio Capital Journal

    A new analysis says that 15 new tax breaks — many benefiting wealthy people and corporations — are coming online in Ohio.

    That will swell the total cost of tax breaks in the state to $11 billion a year, equal to 37% of the state’s annual revenue, the report by Policy Matters Ohio said.

    The new breaks will cost the state an additional $450 million a year as the state has ended a process to review the worthiness of its tax breaks, the report said.

    “Tax breaks are ballooning with little oversight,” Zach Schiller, Policy Matters’ research director, said in a written statement. “The General Assembly should restore a tax expenditure review committee, eliminated in the state budget two years ago, and rein in unproductive tax breaks that reinforce inequality in our state.”

    A big portion of the new tax breaks will go to Intel as part of a $2 billion incentive package in exchange for an investment of at least $20 billion to build a chip plant in New Albany and create at least 3,000 jobs. The new jobs are good news for Ohio, but some economic research indicates that in all but a fraction of cases, businesses would make the same location or expansion decisions regardless of the tax incentives they’re given.

    Meanwhile, the poorest Ohioans shoulder a disproportionate share of the state and local tax burden and House Republicans are proposing to make that burden heavier with House Bill 1, which would flatten that state income tax.

    The Policy Matters report said too many Ohio tax breaks favor people and corporations that need them the least.

    “While some tax breaks are well-directed, such as the Earned Income Tax Credit, which provides needed aid to low and moderate-income working families, a host of them should be repealed or cut back,” it said. “The business income deduction, also known as the LLC loophole, disproportionately rewards a small number of high-income individuals and costs an estimated $1 billion a year with negligible economic impact. Owners of data centers such as Facebook, Amazon and Google are receiving a sales-tax exemption worth more than $250 million over two years, though these facilities employ few workers.”

    The report also called out huge tax breaks to drug wholesalers Cardinal Health, McKesson and AmeriSource Bergen. The companies got those breaks even as the state sued them over claims that they fed and profited from Ohio’s opioid epidemic.

    “Suppliers to big drug distributors including Cardinal Health don’t have to pay much or any Commercial Activity Tax, though this was exposed as a tax dodge by the Kasich Administration’s budget director six years ago,” the report said. “Big retailers like Wal-Mart and Target are profiting from the discount on sales tax they collect, as then-taxation department commissioner Joe Testa testified years ago.”

    The report also called on lawmakers to resume evaluations of how effective tax breaks are at achieving their stated purpose. While many of Ohio’s tax breaks have been sold as job creators, the Buckeye State had the third-worst job growth of any state between February 2022 and February 2023, according to the U.S. Bureau of Labor Statistics.

    “Some tax breaks, such as Governor (Mike) DeWine’s proposed low-income housing tax credit, can be beneficial,” Schiller said. “But the General Assembly should set up a mechanism to rigorously scrutinize the tax breaks we have and cut back on unproductive exemptions and deductions that are proliferating in our tax code.”

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    MARTY SCHLADEN

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    MORE FROM AUTHOR

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  • Analysis: Child tax credit provides needed stability amid pandemic recovery

    Analysis: Child tax credit provides needed stability amid pandemic recovery

    BY: SUSAN TEBBEN and Ohio Capital Journal

    An analysis by an Ohio-based think tank says the expanded child tax credit has given life to families who were already struggling before the pandemic began, but sank further amid job losses and increased child care needs.

    The child tax credit was expanded temporarily in March as part of the federal American Rescue Plan, raising the per-child credit from $2,000 per child in 2020 to $3,600 for each child younger than six, and from $2,000 to $3,000 per child for children age six to 16.

    There is also a $3,000 credit for households with 17-year-old children.

    Monthly payments started going out in July, but the credit is only effective for 2021, with a deadline of Nov. 15 for families to sign up for the tax credit.

    So far, $1.6 billion has been given to more than 2.1 million Ohio children since July 15, federal data from the U.S. Department of the Treasury shows, averaging $437 per month per family.

    The think tank said this expansion brought minority communities and children in rural communities funding they needed and didn’t have even before the pandemic.

    “Years of policy choices have held down wages and limited opportunities for many Black and brown and rural families, draining resources from their communities,” the Policy Matters analysis stated.

    As the pandemic continued, the analysis estimated 1.15 million adults with children reported struggling to pay for basic household expenses before the child tax credit, and after the tax credit, that number decreased by 26%.

    Citing data from the Center on Budget and Policy Priorities, Policy Matters said an estimated 84% of households who make less than $35,000 per year used the refundable child tax credit to pay for “basic needs, including food, clothing, rent, mortgage, phone and internet, to support their family.”

    The CBPP said 60% of those making more than $35,000 per year would also be using the credit for the same basic needs.

    Financial recovery from the pandemic is still going on, as is the COVID-19 pandemic, so having the temporary boost has allowed more financial security and stability.

    A report on child poverty by the National Academies of Sciences, Engineering and Medicine said child poverty costs America an estimated $800 billion and $1.1 trillion in “lost adult productivity, the increased costs of crime and increased health expenditures.”

    Because of the increased financial stability and food security with the expanded child tax credit, among other reasons, Policy Matters recommended that Congress make the expansion permanent.

    “When we as a society prioritize the health and well-being of kids and families, we all benefit,” the thinktank stated.