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  • Pickerington Area Chamber Signs Letter in Opposition to HB 166

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    May 15, 2019

    From All FOR Ohio Blog 
     

    HOUSE APPROVED BUDGET CONTAINS $1 BILLION SMALL BUSINESS TAX INCREASE

    On Thursday, the House passed House Bill 166. It establishes a budget for the state of Ohio for the next two fiscal years. Not surprisingly, the bill now contains numerous policy changes not in the as-introduced version of the budget first proposed by Gov. Mike DeWine back in April.

    Most concerning to Ohio businesses, the House shifted $1 billion of tax burden onto small business owners to provide a reduction in personal income tax rates. The Ohio Chamber of Commerce encourages an overall reduction in tax burden for all Ohioans but thinks that the method of how the government achieves tax reduction is as important as the reduction itself.  Shifting tax burden to businesses is not the right method. Doing so has harmful economic consequences and makes Ohio less competitive with its neighboring states.

    HB 166 reduces the state income tax brackets from seven to five and adds an across the board 6.6% reduction for the remaining five brackets. However, for any entrepreneur, small business owner, or farmer with taxable business income, the rate moves from 3% to either 4.294% or 4.667%, which is a 50% tax rate hike, coupled with a reduction of the Business Investment Income Deduction (BIID) from $250,000 of business income to $100,000, these changes add over $1.1 billion in new costs for Ohio businesses.  

    The BIID was first established in 2013 and finalized in 2015. It was originally enacted to encourage business owners to reinvest in their businesses. This economic tool has been part of the economic recovery of Ohio. Unemployment is down from 7% in 2014 to 4.4% in 2019 and income tax revenues at the state rose by more than $350 million dollars when comparing fiscal year 2018 and fiscal year 2014.  

    Both the Ohio Chamber of Commerce and our Ohio Small Business Council view the BIID as an economic development tool and support retaining the deduction. To that end, we offered testimony during the deliberation of HB 166 by the House, asking for the current BIID to remain untouched. We will continue to deliver this message as the budget deliberation moves to the Ohio Senate. Lawmakers also need to hear from business constituents like you.

    The two-year budget contains over $3billion in new spending and any reduction in personal income tax rates should be funded without raising taxes on businesses that fuel the Ohio economy and provide employment for 2 million Ohioans. The fight for Ohio businesses now moves to the Ohio Senate. Please reach out to your lawmakers and urge them to restore BIID to its current form.