Proposed new tax code for Ohio (Cincinnati, Dayton: unemployed, buy, college)

[Scott SW Ohio]

I see that the proposal would raise the state sales tax while it cuts personal income tax rates. What is the rationale for shifting the tax burden from income to purchases?

[RDriesenUD]

Originally Posted by SWOH

I'd have to agree that this plan is good. In a lot of ways, I'm surprised he proposed it - tax increases are included with the cuts, and there's a lot of stepping on typically Republican toes (big Tobacco is just one example, he's proposing raising the CAT tax as well, if a Democrat did that the business world would be up in arms!)

But I'm happy he's doing it. I don't see any downsides to his proposal really, but it will squeeze poorer tobacco users more. Not sure to call it the cigarette tax as a good idea or bad idea considering the implications either way, but I would have to agree that anything to get people to stop smoking is a win (I'm hoping for the graphic packaging, but we'll see).

Yeah. In a perfect world, no one gets taxed. We don't live in a perfect world though.

[RDriesenUD]

Originally Posted by Scott SW Ohio

I see that the proposal would raise the state sales tax while it cuts personal income tax rates. What is the rationale for shifting the tax burden from income to purchases?

It puts more money in peoples pockets and lets them decide if they want to spend it. It is a way to generate more spending and hiring. It really is a net zero, or can be, but it can hopefully lead to more spending and jobs.

[hensleya1]

Originally Posted by RDriesenUD

This is great, IMO.

Bucking the Trend in the Buckeye State - Forbes

A few thoughts:

1) Although I understand the rationale behind replacing an income tax with a consumption tax (thus taxing the money only when it's used), I want to warn everyone - unless income taxes are slashed when consumption tax rises (as it does in Kasich's proposal, thankfully), you often don't wind up with one tax replacing the other.... you end up with one supplementing the other. The Europeans have this problem... over there it's a value-added tax, VAT, and it's often upwards of 20% and applied to purchases... in addition to the exorbitant income tax rates they pay over there.

2) When I was in college, I worked at a BP that was the first gas station off the first highway exit in Kentucky. Marlboro's were $3.75 a pack there, compared to over $6 a pack in Ohio at the time. You can guarantee that half of Cincinnati would go over there to buy cigarettes, because almost everyone I carded had an Ohio driver's license.

And they weren't coming from just Cincinnati - they were coming from Peebles. Or Wilmington. Or Washington Court House. One time I met a couple from Massachusetts who were taking a cross country road trip and took a detour to Kentucky to load up on cigs... they left with ten cartons. When I told them it was about $400 for it all, they thought it was a steal of a price and asked for 10 more.

Long story short.... people will do strange things in search of cheap cigarettes.

[woxyroxme]

Since this is a statewide issue this should have been posted in the Ohio forum.

I don't give a rats a$$ whether you don't like smokers, should we do away with freedom because some people will do things with their freedom that you don't like?

How about taxing all the things people do that are bad for society like driving gas guzzling SUVs, having too many kids or living in a big house that uses too much energy for lighting, heat and air conditioning. Maybe we could make Catholics pay a special tax like Muslim countries do to Christians.

Using the tax code to control behavior is a slippery slope we don't need to be on.

[grmasterb]

Originally Posted by woxyroxme

Since this is a statewide issue this should have been posted in the Ohio forum.

I don't give a rats a$$ whether you don't like smokers, should we do away with freedom because some people will do things with their freedom that you don't like?

How about taxing all the things people do that are bad for society like driving gas guzzling SUVs, having too many kids or living in a big house that uses too much energy for lighting, heat and air conditioning. Maybe we could make Catholics pay a special tax like Muslim countries do to Christians.

Using the tax code to control behavior is a slippery slope we don't need to be on.

The tax code will always be used to encourage some behaviors and discourage others.

Not sure what constitutes "too many kids" or what the Catholic comment is getting at.

[SWOH]

Originally Posted by woxyroxme

Since this is a statewide issue this should have been posted in the Ohio forum.

I don't give a rats a$$ whether you don't like smokers, should we do away with freedom because some people will do things with their freedom that you don't like?

I will echo your call to move this to the Ohio forum rather than here. This could be a great debate, but right now it's only reaching Dayton-minded people. Other perspectives would be interesting to hear.


It is a slippery slope to heavily regulate personal liberties and freedoms. I am personally ok with heavy regulations, but not ok with outright banning of harmful products. Look to cases in past and present for failed policies against alcohol and marijuana banning.

BUT if the item is very harmful, like cigarettes, then yes there should be disincentives in place to keep people from consuming it. Same goes for other products too, like junk food, certain kinds of fast food, and soft drinks. IMO the Bloomberg war against jumbo sized soft drinks was probably one of the best things to happen to awaken our national psyche. And why hasn't anyone proposed mandating standard sizes for soft drinks at the drive thru? Why is a large drink at one restaurant the same size as a small at the next? It seems silly, but there needs to be a national standard so people will know exactly what to expect when getting a drink. But that's a different topic....

[woxyroxme]

Originally Posted by grmasterb

Not sure what constitutes "too many kids" or what the Catholic comment is getting at.

Those are examples of things that are already in place in other areas of the world. If there are catholic schools then how will the public school system indoctrinate those kids into being good global citizens of the new world order.

The government will not take your money and freedom all at once, just slowly and gradually over a period of time, death by 1000 cuts.

[IDtheftV]

Originally Posted by woxyroxme

Kasichood - steal from the poor and give to the rich.

This chart is misleading. It makes it look like the top earners are getting something and it's coming from the lower earners.

The tax code for OH has these rates:

Income over
this amount
------------------------
$ 40,000 ... 5.0% bracket
$ 80,000 ... 5.7% bracket
$100,000 .. 6.6% bracket
$200,000 .. 7.2% bracket

For taxable income $10k to $15k, the bracket is 2.8%.

Keep in mind that this is the "bracket" or "marginal rate." Someone with $10k in taxable income has to earn roughly $20k since the OAGI is based on the Federal AGI. That is, the person who works full time and makes $10/hour pays about 1.4% if their income in taxes.

Here's the bottom line:
The $100k earner pays about 2.3% of their total income in taxes to the state - nearly double the rate. The AMOUNT of taxes received by the state is about $180 from the $10/hour person and $2,300 from the $100k person - more than 10x the burden.

It's easy to make stats and graphs look bad when you just put the stuff out there that makes your point.

From the standpoint of the unemployed person, the crappiest places to look for a job are the states where the personal income and corporate tax rates are the highest.

Originally Posted by Scott SW Ohio

I see that the proposal would raise the state sales tax while it cuts personal income tax rates. What is the rationale for shifting the tax burden from income to purchases?

Many state ONLY have a "purchase" or consumption tax and no income tax.

I'm not for an all-consumption tax and am not in favor of a flat tax, but to make it look like the high earners are not carrying the load is disingenuous.

Also, we ( society ) needs to focus on why the middle class is disappearing. Too many people have to settle for crappy-paying $10/hour jobs and the jobs paying N of $25 are disappearing. A lot of the reason is that "we" seem to hate it when businesses make profits and feel some sort of perverse need to confiscate it at the company-level. Business doesn't pay taxes, they just collect it.

Getting back to the cig-tax; as the tax goes up on the item, the more the item starts to appear like a black-market good ( like cocaine ). People cross state lines and do other things to smuggle it. If cig-taxes were to go up to $10/pack, many, if not most smokers would buy ( some ) Black Market tobacco. It would just be another opportunity for organized crime.

Sure, tax on a pack of smokes isn't that high, but where do we cross the line from an annoyance for smokers to a cost that makes it worth it to buy illegal packs of cigarettes? ( It's like the prostitute question - would you ... for $1million? Yes. $1.00? No. ... now we're negotiating )

[RDriesenUD]

Originally Posted by hensleya1

A few thoughts:

1) Although I understand the rationale behind replacing an income tax with a consumption tax (thus taxing the money only when it's used), I want to warn everyone - unless income taxes are slashed when consumption tax rises (as it does in Kasich's proposal, thankfully), you often don't wind up with one tax replacing the other.... you end up with one supplementing the other. The Europeans have this problem... over there it's a value-added tax, VAT, and it's often upwards of 20% and applied to purchases... in addition to the exorbitant income tax rates they pay over there.

2) When I was in college, I worked at a BP that was the first gas station off the first highway exit in Kentucky. Marlboro's were $3.75 a pack there, compared to over $6 a pack in Ohio at the time. You can guarantee that half of Cincinnati would go over there to buy cigarettes, because almost everyone I carded had an Ohio driver's license.

And they weren't coming from just Cincinnati - they were coming from Peebles. Or Wilmington. Or Washington Court House. One time I met a couple from Massachusetts who were taking a cross country road trip and took a detour to Kentucky to load up on cigs... they left with ten cartons. When I told them it was about $400 for it all, they thought it was a steal of a price and asked for 10 more.

Long story short.... people will do strange things in search of cheap cigarettes.

Well said.