"After Slashing Funds For Health And Education, Ohio Prepares To Cut Taxes For Banks"
During the Great Recession, Ohio has cut its budget to ribbons, reducing funds for health services, higher education, and K-12 education. The budget cuts are so severe that some towns might officially cease to exist (due to disincorporation).
However, it seems that Gov. John Kasich (R-OH) and the Republican legislature feel that the state has money to burn on tax cuts for the financial industry:
An Ohio Legislative Service Commission analysis said the bill “may decrease GRF (general revenue fund) revenue by an uncertain amount, though the revenue loss may be up to $30 million per year, when compared to the introduced version of the bill.”
The potential of a $23 million to $30 million tax cut for financial institutions drew fire from Democrats at a time when schools and local governments are suffering from significant budget cuts.
Kasich’s original plan was meant to be revenue neutral, but the legislature cut it up until it turned into a gift to the banks worth millions of dollars. As Policy Matters Ohio noted, the justification for cutting banks’ taxes — that they will use the money to increase lending — is fundamentally flawed:
The idea that cutting bank tax rates will fuel more lending and a stronger economy is misplaced. Since many Ohio banks already are “flush with cash,” as a representative of the industry puts it, cutting their taxes is unlikely to lead to new lending. Ohio banks are doing well, as a Feb. 28 press release from the Ohio Bankers League entitled “Bumper Quarter for Ohio Banks” attests, and are in no need of a tax cut.
“We’re basically giving the banks … a $25 million gift every year,” said state Rep. Mike Foley (D). “But we’re also doing that in the context of an economy and state budget in Ohio that has been wracked and harmed and hurt and mangled by the financial industry that we’re giving benefits to today.”