When a tax cut is not a tax cut; an editorial.
Our Governor successfully pushed for state income tax reduction in the last budget and wants to reduce the tax even further in the new budget.
Sounds good right?
In September 2013 income tax rates decreased by 8.5%. Good for the big earner not so much for the little earner.
For example: A taxpayer with taxable earnings of $40,000 saves a whopping $156 per year while a fellow resident with earnings of $500,000 saves $3,800*.
At the same time a sales tax increase took effect, resulting in this possible scenario:
A Clinton county resident earning $40,000 uses his savings from the income tax reduction to purchase a $30,000 car and would pay 6% of his income in sales tax. His more frugal neighbor earning $500,000 would pay a mere ½% of 1% of income for the same purchase.
The last budget bill drastically cut the amount of income and sales taxes that residents send to Columbus each year and that was returned for local services. The result of this reduction results in local schools and governments having to either cut services or ask for increased local taxes.
In 2007 the state instituted a new homestead property tax exemption for home owners over the age of 65.
In the latest budget, the homestead Exemption is being scaled back. Everyone currently receiving the exemption is grandfathered in – they won’t lose their tax break. But now, new applicants to the program will only be eligible if they make less than $30,000 a year. If our $40,000 a year man owned a $100,000 home and became age 65 this year his property tax bill will increase by as much as $300 per year over those already receiving the exemption.. Any new tax levies will cost an additional 12.5% as a result of changes in property tax law.
Paul Hunter contact at firstname.lastname@example.org