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Small Investment, Big Difference: How an Ohio Earned Income Tax Credit Would Help Working Families

April 10, 2013

Gov. John Kasich has proposed major changes in Ohio's tax system, including broadening the sales tax to cover most services, cutting the sales-tax rate, slashing income taxes and giving business owners a big tax break. Together, the impact of these changes will be to cut needed revenues, while transferring income from poor and middle-income Ohioans to the affluent.Broadening the sales tax base while cutting the state rate to 5 percent would produce significant needed revenue and make the sales tax more viable long-term, since more and more of the Ohio economy is based on services.The problem: Low- and moderate-income Ohioans would be most affected, as they would pay the most as a share of their income. And low-income Ohioans already pay more of their income in state and local taxes than rich Ohioans do. If Ohio is going to broaden the tax base, the state should adopt a state Earned Income Tax Credit (EITC), as 25 states (including the District of Columbia) have done. It is good policy at any time, especially when legislators are considering raising taxes on those least able to pay. An EITC not only helps create a more fair tax structure, it provides a boost to local economies, as EITC dollars are often spent and saved locally. This multiplier effect creates local and state tax revenue based on goods and services that are sold. Below we review the successes of the federal EITC and how it can be implemented in Ohio.

Sales-tax Credit Would Help Low-income Ohioans

April 8, 2013

Gov. John Kasich has proposed major changes in Ohio's tax system, including broadening the sales tax to cover most services and cutting the state rate from 5.5 percent to 5 percent. This would produce significant needed revenue and make the sales tax more viable long-term, since more and more of the Ohio economy is based on services. The problem: Low- and moderate income Ohioans would be most affected, as they would pay the most as a share of their income.Key FindingsA state sales-tax credit, styled on one in New Mexico, would benefit hundreds of thousands of Ohioans.A sales-tax credit would provide a targeted way to offset the regressivity of the existing sales tax.Together with a state Earned Income Tax Credit, it could protect nearly two-thirds of the lowest-income Ohioans from the effects of Gov. Kasich's plan to broaden the sales tax.

Employment Connection: Demand-Driven Model Increases Job Placement

April 3, 2013

In this report, we examine the transition to a demand-facing, employer-driven model that focuses on the transition impact to the adult and dislocated worker populations served by the Workforce Investment Act. By looking beyond the Workforce Investment Act common measures, we found that the number exiting the program to employment increased five-fold. Even as more people exit the program, a higher percentage of exiters are being placed in jobs. These are surprisingly strong results in a still-troubled regional economy.

Tax Break for Business Owners Won't Help Ohio Economy

April 2, 2013

The Kasich administration has proposed a major new income tax break for owners of Ohio businesses. These include a variety of different kinds of businesses -- S Corporations, limited liability companies, partnerships and sole proprietorships -- that have one thing in common: Ohio does not tax the businesses directly on their profits, but rather as the profit passes through to the individual income tax returns of the owners. Hence, they are called "passthrough entities."This new tax break is unlikely to generate new jobs. A recent study by Michael Mazerov of the Center on Budget and Policy Priorities finds that state income-tax cuts won't help small businesses create jobs.1 This brief, which should be read together with the Mazerov study, provides Ohio data relevant to the Kasich proposal.

Green Electricity and Transportation (GET) Smart: Policy Solutions to Increase Energy Independence

April 1, 2013

Ohioans spend a large amount of money on energy. In 2010, we spent $45 billion, nearly 10 percent of our state's gross domestic product. Nearly half of those energy dollars (or more than $20 billion) was spent to fuel cars, trucks, and buses, and nearly all of which left the state or country in order to import oil. Ohio can reduce its dependence on imported oil by promoting electric vehicles (EVs) and buses, as well as passenger and freight rail.

The Tax Flight Myth: People Move for Jobs, Housing, Family - Not Taxes

March 20, 2013

Reducing state income taxes will have no discernible impact on whether people move into or out of Ohio. An overwhelming body of serious economic research shows that people are far more likely to move between states because of job prospects, housing costs, family considerations and weather than because of tax levels. This new study provides additional information showing that taxes do not affect interstate moves in the Ohio region.

Kasich Tax Proposal Would Further Tilt Tax System in Favor of Ohio's Affluent

February 7, 2013

The Kasich administration proposal to cut income taxes and expand sales taxes would produce big tax cuts for Ohio'smost affluent residents while increasing taxes on lower- and moderate-income families.

Ohio's State and Local Taxes Hit Poor and Middle Class Much Harder than Wealthy: 50-State Study Provides Detailed Profiles, Comparison of Tax Systems

January 30, 2013

Low- and middle-income Ohioans pay a much greater share of their income in state and local taxes than the state's most affluent do, according to a study released today.

Boosting Home Care Options Under Medicaid: Balancing Incentive Payment Program, Community First Choice Option

January 28, 2013

In Ohio and nationally, a significant share of Medicaid is dedicated to patients who are elderly or have disabilities. Too often, this is in a high-cost nursing home setting. The ACA offers incentives to encourage more cost-effective home care services for people who need help with dressing, bathing, chores, preparing meals, or other activities of daily living. A study of state expenditures on long-term care and services between 1995 and 2005 found that states with broad access to home and community-based services realized cost savings in the long term as they shifted from institutionalized settings (nursing homes) to home care services, although there was a short-term increase in costs during the shift.The ACA offers new opportunities to help states provide long-term services and supports to people in their homes. This brief examines two of the programs: The Balancing Incentives Payment Program, which increases federal matching funds for states like Ohio by two percentage points through 2015 for increased home and community-based services, helping with any up-front costs, and the permanent Community First Choice Option (CFCO) which provides a boost of six percentagepoints, from 63.58 to 69.58 percent, in federal funding for personal attendant services in the home or community.

Precarious Recovery: Ohio's Final Jobs Report for 2012 Shows Decline in Unemployment, but Also in Jobs, Labor Force

January 18, 2013

There was mixed news for Ohio's job market as 2012 ended, but two surveys released by the Ohio Department of Job and Family Services (ODJFS) showed the precarious state of the economic recovery. The unemployment rate continued to decline in December, but Ohio saw a drop in the labor force and another decline in the number of jobs.

Avoiding Accountability: How Charter Operators Evade Ohio's Automatic Closure Law

January 1, 2013

Ohio's charter-closure law is touted as one of the toughest in the nation because it requires the automatic closure of charter schools that consistently fail to meet academic standards. The law has been showcased by the National Association of Charter School Authorizers (NACSA) in its "One Million Lives" campaign, which calls for tougher state laws to close failing charter schools.The widespread attention and support of the NACSA campaign has pushed Ohio's closure law into the spotlight as a model of accountability for low-performing charter schools. However, The Plain Dealer's editorial board, in a commentary on NACSA's praise of Ohio's charter school accountability standards, pointed out what NACSA did not: Ohio's charter school laws, while they may have stronger mandates for closure than those of other states, are still replete with loopholes. Since the charter-closure law went into effect in 2008, 20 schools across the state have met closure criteria, and all are currently listed as closed by the Ohio Department of Education (ODE). But an investigation of the schools by Policy Matters revealed that eight schools -- and the management companies that run them -- have found ways to skirt the closure law and remain open, severely undermining the law's effectiveness and highlighting the lax accountability that prevails in Ohio's charter sector. For-profit managers -- the Leona Group, Mosaica Education and White Hat Management -- operate six of the reopened schools.

A Budget That Works

January 1, 2013

This report highlights selected public services that will be impacted by the state budget in education, health care, and human services as well as selected local government funding and services. These are only some of the important items for the state to support, chosen either because of their importance or because of they are a focus area of Policy Matters Ohio.