When talking about Ohio’s controversial business tax deduction, proponents often paint the picture of hard-working, small-business, and mom-and-pop operations. In fact, a new analysis by the Ohio Legislative Service Commission indicates that as much as $450 million a year of those business tax cuts are benefiting a wealthy slice of wage earners who represent only 0.5 percent of the state workforce and just 5 percent of those claiming the deduction.
Of the $1.1 billion a year the business tax cuts are costing the state, between 34 and 41 percent of the benefit is going to people who are making more than $250,000 a year, according to the analysis.
Scaling down the deduction to those making less than $100k from their small business would retain the benefits for those businesses that really need help, small local businesses. Bringing in more revenue to fund education and infrastructure is important to a broad economic prosperity that will help all businesses. Studies have shown that a tax break to the wealthy does not necessarily get put back into the economy. Some have suggested attaching conditions for example limiting the break to those business owners that invest it on hiring employees, raise wages or expanding their business.
What changes do you think would make this more effective to help Ohio small businesses? Contact us at OSBC to start a conversation.