ࡱ> 241a Qjbjb11 $"[[Q.......     ,aLLLLLLLL,Ri.LLLLL..LLLj.L.LB4v"....L..@ wD "10a]].||News Article from Focus Education 2/25/10 House Committee Explores Impact of Loss of Income Tax on Education In what Rep. Tom Letson (D-Warren) told Hannah News was the first of a series of hearings to explore the impact of abolishing the state income tax as proposed in HB400 (J. Adams) on a variety of state services, the House Ways and Means Committee Wednesday heard from primary and secondary education representatives. The morning began with a packed room that dwindled over the day as the hearing continued on much longer than most anticipated. During the afternoon session, economist Howard Fleeter, testifying on behalf of the Education Tax Policy Institute, focused on the impact of the loss of the income tax generally. To put it into perspective, he told the committee that eliminating all state employees would only save the state $5 billion - and elimination of the income tax, according to the Legislative Service Commission (LSC) estimate, would total $12 billion when full implementation occurs in 2019. If that revenue were to be made up by the sales tax, Fleeter said, the sales tax would have to increase 11 percent a year for 10 years - an unheard of increase for one year let alone for 10 consecutive years. Using the five principles of a quality tax system identified by the Committee to Study State and Local Taxes, which was chaired by Gov. Bob Taft's Tax Commissioner Tom Zaino in 2003, Fleeter walked the committee through the impact of the income tax elimination: Simplicity - "The tax system would be simpler without a state income tax." Equity - "The vertical equity [that is the recognition that taxpayers with different abilities to pay should pay differently] would be severely compromised by the repeal of the state income tax ... the bottom two-third of Ohio's taxpayers would enjoy only 15 percent of the benefits of the repeal, while the top 2 percent of Ohio's taxpayers would enjoy 31 percent of the benefits." Stability - Citing the $12 billion estimated loss for 2019 and $7 billion or 44 percent of the General Revenue Fund now, Fleeter said, "The elimination of such a large amount of revenue from the state budget would have devastating consequences for state services. Local services that receive state funding (such as K-12 education) would also be severely affected." Neutrality - This principle holds that the tax system should not unduly influence economic behavior. "Some argue that Ohio's multiple bracket income tax system is a disincentive to business investment. It can also be argued that this concern was satisfactorily addressed by the 21 percent income tax reduction that was part of HB66 ... Ohio ranks 35th among the 50 states in state taxes per capita according to data which reflects only three of the five" income tax cuts. [Late last year, the Legislature at the request of the governor delayed the fifth and final cut meaning that instead of cutting income tax 21 percent over five years, it has been 16.8 percent over four.] Competitiveness - This principle maintains that Ohio's tax system should not impose excess burdens on taxpayers, particularly compared to other states. Fleeter noted that the study committee "did not conclude that the existence of the state income tax was a serious impediment to Ohio's competiveness with other states. In fact, comparison of Ohio with other states without an income tax is not promising. Five of the other states have industries that they can tax in order to make up foregone income tax revenue. [tourism, minerals, gambling] Two of the other state are a fraction of the size of Ohio and do not provide useful comparisons. The other two state exhibit unemployment rates that are the same or similar to that in Ohio." Barbara Shaner had opened the afternoon's testimony, speaking on behalf of her organization, the Ohio Association of School Business Officials (OASBO), the Buckeye Association of School Administrators (BASA) and the Ohio School Boards Association (OSBA). In answer to continuing inquiries from Rep. Terry Boose (R-Norwalk) about why the education community is so concerned about HB400 but was not concerned about HB1 and the implementation of the evidence based model (EBM) which would add so much more in additional costs than would be lost from the income tax, she told him that passage of HB400 would render the state even less able to fund the EBM changes. Both Boose and in the morning Rep. Seth Morgan (R-Huber Heights) told the witnesses that they did not understand why the education community was so opposed to HB400: as Boose explained, "No one said education would be cut a penny; the General Revenue Fund would just come down." Shaner finally told the committee that they sat through the budget hearings for the current biennium and "we saw agency after agency devastated by cuts. We can't see avoiding cutting education with the levels being proposed." !+Qh;qh;qh;q56h;qh;q5*+noqr  8 9 ; gd;qQ; < ,-/0PQSTklnoQgd;q":p;q/ =!"#$%<@< NormalCJaJmH sH tH DA@D Default Paragraph FontRi@R  Table Normal4 l4a (k@(No ListQ" z z zQQ*+noqr   89;<, - / 0 PQSTklnoS0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0@0`0`0`0`0`0`0`0`0`0`0`0`0`0`0`0`0`0@0@0@0@0@0@0@noqr   89;<, - / 0 PQSTklnoSY`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`Y`HA0A8?0A8?0A8?0A8?Q ; QQ  Y^ouS*+ S:@**`**0Q0 @UnknownGTimes New Roman5Symbol3 Arial qhZ↏!!24*)News Article from Focus Education 2/25/10Ohio School Boards AssociationOhio School Boards Association Oh+'0d  DP p | ',News Article from Focus Education 2/25/10 Ohio School Boards AssociationNormal Ohio School Boards Association1Microsoft Word 11.3.5@_@ s&@rL-GPICTb HHb bHH{L{bb          Iwwwwsswswwswso{so{S"ZRNsVZwcg9g9F1g9NsRg9^Z^Zg9RZZ^^g9g9ZVckZcRZZ  Iwwo{wo{wwswswkZo{wwcR^Z^cZNsF1^g9R^VkZZkZZkZ^RNsRVcg9ZkZcZkZkZVcZNsRkZVkZZVVZ^cVg9RV       cwwo{kZwwo{o{wwwwwwwsss"NsVwRVg9Z^ZkZZNsV^g9ZVkZco{ZkZVkZkZJRkZg9ZRcNsVR^RVVVRZg9R^kZ^Zg9ZkZVZ^ZZkZGwwwswwwwwwkZwo{o{4R^V^VcNsZ^RkZZkZ^JR^o{NsRVRZkZVRZkZRRNscg9R^NsVRNscZNsRNskZVZZkZZ^ZNscNsRVV Bwwwswwwo{wwo{w=kZg9ZwZBkZZkZZVVkZVkZVg9g9ZkZZNsg9^Z^kZo{c^ZcR^cR^Z^ckZVg9ZVVZVg9^VVZcZNsF1^g9R^; o{wwwwwswww}7ckZ^F1^ZZVg9R^VkZZkZZNskZZkZo{NsNsZVVZZ^NsVZVZ^Z^cVg9RVkZ^ZkZ^F1RV^kZ^Z       MkZwwwwwwwwwwww kZR^NskZZNso{VcR^cV-wZRVZVcV^ZkZZZNskZJRVg9ZVkZVZRZZRkZg9R^ZVg9VZJR^R^VkZNsc3wwwwwo{wsDcZV^V^^ZVNskZ^JRRVc^kZg9RVVNsRZg9VV^cRVg9^ZcVkZo{Vcg9R^VkZRkZF1ZVZ^ZF1Vw^cZVZNs^Zg9gwwwo{ws wwwsswo{wkZo{wwswwCcRVRkZZg9kZ^^RkZwRZ^kZg9NscZVRF1VkZkZZkZg9F1VZ^cV^F1kZVkZcZkZZg9kZVZg9Z^g9ZkZNs^Z^ZZVJR^'swwswwwO o{NsRVRZkZJR^kZZkZJR^NscZNsRNskZc^V^kZVkZZ       9kZwwwwwwww?kZZZ^g9o{g9Nsg9ZZ^kZZZ^R^^wR^g9ZRJR^cZNsF1^g9R^JRVg9^kZo{NsJRV^VcVkZkZNsVR^NsRRg9^^ZKwwwwg9wwwwwswwwBVV^kZZZVkZg9ZNs^g9R^NsVRJRRo{kZRNssVVZRo{Ns^VJRRVZkZJR^NscZNsRNskZwVccRZo{Vcg9ZJR^ [wwkZo{wwwkZo{wwkZwo{wwwwsw>c^cRkZJR^^R^kZo{c^cZNsF1^ZRZVkZcRckZ^Z^NsNsg9^RwZ^Rg9ZNsNskZg9Ro{kZRNsVwR^VkZ^kZwo{o{kZ;o{NsRRNskZJRg9V^ZVZcc^kZZNsg9VR       Qo{wwwwwwo{wwwwwCkZJRVZ^kZ^V^^VZkZ^g9ZF1NsNsZ^^ZRg9g9R^ZNs^Zg9Nswg9kZ^^RkZZVRwg9R^ZNs^Zg9NsVwZ^kZZRVkZ^?wwswo{wwsswwBg9ZNsckZ^VZRkZZ^kZcJRg9Vg9^VkZkZZkZkZVg9^VkZZRV^VR^VkZZRNsckZ^VZRZkZZV^g9^VkZRg9VkZZV^skZ3RkZNscZVZ^cNskZ^g9^VkZZ       Ywwwswsww swwwo{wkZw@cRNscg9R^kZ^^ZkZNscRkZ^ZZkZV^^VkZZg9g9VRg9Ns^NskZR^V^kZVZRg9g9R^cZNsF1^g9R^NsRRZg9ckZwwwkZwwwwwo{wo{wkZswkZo{wkZARNsg9^VVZcZcVkZkZVkZ^ZwVNsZRVRZcRV^^ZRg9cRkZVwZRkZVkZg9VkZVkZcZNsF1^ZZRV^kZkZZNskZBo{o{wwwwwwwwsw>^VNsZNsg9VVZg9kZ^^RkZVRkZV^Zg9R^cZNsF1^g9R^g9RkZZNsRJR^o{NsRVRZkZg9R^o{VNsNskZ^g9VkZw^kZo{NsJRJRo{ZV       7kZwskZwwwws}7Ro{NsRkZZZg9skZR^NskZZg9ZRNskZVV^kZZR^RNsRkZ^Nswo{JRZ^g9VZg9JR^o{VcZNsRg9VkZ       Ko{skZwwwwwwwwsswwCV^^Zg9skZR^kZRg9ZVR^^Zg9kZJRVg9o{ZJR^kZ^NscVZRVJRVg9g9NsZVg9^kZZVkZJRZo{RkZ^Vg9VNskZZVZSwwwsswwwwwwwwswBg9ZVg9ZRZ^RZJRZo{kZRkZJRZg9kZVV^kZZR^Z^kZ^kZRg9cZNsRkZZNs^Z^ZRg9g9R^kZ^Z^NsZkZg9R^ZNsg9^                ՜.+,0 `hpx  '! *News Article from Focus Education 2/25/10 Title  !"#$%&'(*+,-./03Root Entry F- e51Table]WordDocument$"SummaryInformation(DocumentSummaryInformation8)CompObjXObjectPool- e- e FMicrosoft Word DocumentNB6WWord.Document.8