PERSPECTIVE: Parties taking turns claiming, criticizing Ohio’s sweeping business tax reforms

PERSPECTIVE: Ohio tax reform attacks pinballing

COLUMBUS, Ohio — Ohio Republican gubernatorial candidate John Kasich chose some unlikely ammunition last week to attack the lagging state economy under Gov. Ted Strickland: a tax code overhaul written by fellow Republicans.

“I think they did their best and it just wasn’t enough,” Kasich said during his first formal news conference since announcing his run. “Clearly, the proof’s in the pudding.”

Kasich favors eliminating the state income tax over 10 years, which estimates say will require government spending reductions of $12 billion by 2020 if current economic projections hold.

It was not quite clear whom Kasich meant by “they,” but a couple of potential contenders were standing in the room.

Ohio Republican Party Chairman Kevin DeWine was on the Republican leadership team in the GOP-led Ohio House in 2005, the year the tax reforms were written.

State Auditor Mary Taylor, whom Kasich was introducing that day as his running mate, also was heavily involved as a state representative from Green in putting the package together at the time.

Taylor, conceding she’d spent four years of her life on the issue, responded carefully when questioned about Kasich’s apparent attack on one of Ohio Republicans’ most significant recent accomplishments.

“We had lots of discussions and I felt like we were heading in the right direction at the time,” Taylor said. “I did feel like there was more we could do.” She said a top-to-bottom review of the state tax code would need to be a priority of the Kasich-Taylor administration as it reinvents government.

To be clear, Republicans didn’t just think they were heading in the right direction with the tax reforms. They felt they would be transformative.

Take a look at what then-Gov. Bob Taft, a Republican, said about the changes during his 2006 State of the State address:

“At this time last year we had a tax code that was mired in the distant past, punishing investment and ignoring innovation. We worked day and night to bring that code into the 21st Century. We cut the income tax. We junked the corporate franchise tax. We scrapped the inventory and equipment tax,” Taft said.

“And today,” he continued, “we have a fair code that encourages innovation and helps small business owners. A code that will help convince employers of all types to locate and expand in Ohio to serve North America and the world. They said it couldn’t be done, but together we made it happen.”

If Kasich’s statements were more than a mere semantic glitch and he intends to target the effectiveness of the 2005 tax reform package on the campaign trail, it could put some other candidates in a pickle.

State Sen. Jon Husted, a 2010 candidate for secretary of state, views the tax code overhaul as one of — if not the — most significant accomplishments of his speakership of the House. A push from the top of the ticket could force him to soft pedal the issue on the campaign trail or, worse yet, contradict the party’s gubernatorial nominee from the soapbox.

Kasich’s outspokenness on the issue, if it persists, won’t be a cake walk for Democrats, either.

Though they did not spearhead the effort, Democrats under Strickland’s guidance have embraced the tax changes as their own. They were left intact without a fight in the last two state budgets, except for the postponement of the final year of a tax cut. They remained even after Democrats took over the House, with the idea that tax code revisions take time to show an effect.

Ohio Democratic Party Chairman Chris Redfern even bragged about their effects in criticizing the Kasich tax plan: “Under Gov. Strickland, Ohio already has the lowest overall tax burden in the Midwest.”

Support for the reforms places the party at odds with some liberal voices in the state, such as the Cleveland-based think tank Policy Matters Ohio.

“House Bill 66, which overhauled Ohio’s tax policy with the stated purpose of strengthening Ohio’s economy, has not only shown no signs of success, but has drained our state budget of the much needed revenues to turn around Ohio’s depressed economy by investing in our infrastructure and workforce, and stabilizing families as they weather the current economic storm,” their legislative briefing materials say.

Policy Matters has recommended, among other tax policy reversals, restoring the top tax rate on the wealthiest Ohioans, restoring the corporate income (franchise) tax, and returning income tax rates to 2007 levels.

Opposite solution, but similar criticism. Republicans and Democrats who supported the reforms now find themselves caught in the cross hairs.

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