WILMINGTON, Ohio – Ohio’s governor is proposing another $500 million in tax cuts he says will keep the state’s recovery steaming along.
EXTRA: Read the text of the speech
Gov. John Kasich says more tax cuts are needed to encourage more small businesses to grow here.
“High income taxes punish risk taking, investment and job creation — and they drive some of our best and some of our brightest to other states in search of lower taxes and better opportunities,” he said in his annual State of the State address Tuesday night in Wilmington, a city where unemployment had soared to m19 percent during the recession but is now only about 6 percent.
Kasich says the state of Ohio is strong but there is still more to do for the economy to fully recover, including another cut in the state’s income tax.
Kasich’s $72.3 billion two-year budget seeks to cut the state income-tax rate by 23 percent. By 2017, the top marginal income-tax rate will have fallen from about 5.9 percent in 2011 to 4.1 percent. He also has proposed eliminating the tax on income for small businesses with annual gross receipts of $2 million or less.
“High taxes, especially the income tax, punish a small business owner’s willingness to take the risk to hire more people, to invest in improvements, and work harder to be successful. Lower taxes incentivize all of those things. And when small businesses across this state take risks, when they invest and expand, it echoes throughout our economy. It’s called growth. It’s called job creation. And it lifts Ohio,” he said.
Besides tax cuts, Kasich touted a balanced budget, surplus, and common-sense regulations.
Democrats have criticized Kasich’s tax changes as shifting the tax burden to middle- and lower-income residents, contending they would pay a higher percent of their paychecks in taxes compared with wealthier Ohioan.
Kasich and majority Republicans in the General Assembly should instead focus on promoting middle class prosperity by “increasing wages, improving schools, investing in infrastructure, respecting working families,” said state Democratic Party Chairman David Pepper in a statement. “Then the state of the state will ultimately be strong.”
Kasich used the speech to make his case for a proposed tax increase on the oil and gas industry, saying it won’t deter production in the state.
He has called for a fixed rate on crude oil and natural gas of 6.5 percent at the wellhead, and a lower rate of 4.5 percent for natural gas and natural gas liquids sold downstream. Proceeds from the increase would help reduce the state income tax.
The governor’s fellow Republicans who control the Legislature have repeatedly scrapped Kasich’s past attempts to raise the tax, amid pushback from anti-tax groups and the industry.
Kasich said he was disappointed in detractors who say the tax increase would kill the industry, calling such talk “a big fat joke.”
He also made his pitch to state lawmakers to do more to help residents move out of poverty.
In his two-year state budget, the Kasich has proposed a way to let lower income families keep child-care subsidies as their income increases. He also wants to use $310 million in state and federal dollars to better coordinate public assistance programs and job services at the county level.
According to the latest U.S. Census estimates for 2013, close to 1.8 million Ohioans are living in poverty. That’s a poverty rate of about 16 percent.
Kasich recognized the state’s nurses, a college basketball player and life-saving pair of residents with his annual awards for courage.
He gave the awards to the nurses of Ohio, basketball player Lauren Hill, and Shane and Brittney Robinson.
Hill got national attention when she played in a Division III basketball game with Mount St. Joseph on Nov. 2 despite suffering from an inoperable brain tumor. The freshman has since November helped raise more than $1.5 million for cancer research.
Kasich created the award in 2012 to recognize Ohioans whose selflessness and courage can inspire others.