COLUMBUS (WKBN) – State Senator Joe Schiavoni wants Ohio to take a different approach to job growth. That is why he will be proposing legislation that eliminates the business income tax deduction and replaces it with a program that would provide money or give credits to businesses that do various things that lead to Ohioans becoming or staying employed.
“Every legislator on this floor in the senate, and every legislator in the house, and the governor, and everybody is talking about jobs as their priority. The provisions that we’re putting forward would incentivize businesses for hires,” Schiavoni said.
First off, he wants to get rid of the tax deduction, which in tax year 2015 saved an estimated 14 percent of individual tax filers in Ohio — about $943 million.
The other 86 percent of individual filers paid around $8.2 billion in taxes that year.
Schiavoni claims that most of the $943 million was never reinvested into the communities. While traveling around the state, he would talk to people using the tax deduction.
“I said, ‘Well, what did you do with that money? What did you do with that extra money that the state gave you through this tax loophole?’ and they say, ‘Nothing. It’s in my savings account,'” Schiavoni said. “They’re not investing in hiring new people, they’re not investing in buying new computers for their office, they’re not investing in getting the building repainted, which is putting people to work. They’re simply keeping it in their savings account. So how’s that helping everybody?”
Schiavoni doesn’t fault them for using the deduction but doesn’t think it is fair that only a portion of Ohioans can take an option not to pay taxes on business income up to $250,000 and then just 3 percent beyond that. This option is open to sole proprietorships, partnerships, LLCs, and S-Corps.
“The Republican majority talk about this tax cutting like it’s gospel,” Schiavoni said. “That’s the way that they’ve done business, is to vote for things that would put more money in rich people’s pockets and at the end of the day, that money doesn’t trickle down into communities through investments.”
Schiavoni estimates eliminating this deduction would generate about $2.2 billion bi-annually.
He wants to use that money to invest in public-private partnerships and infrastructure that creates jobs.
He said his plan would give tax credits to businesses that partner with a nonprofit to get an infrastructure project done.
It would also set aside $50 million to repair non-state roads, bridges, and some underground infrastructure. Schaivoni said there would be caps on all of those projects.
Small businesses that needed that last bit of seed money to get started could apply for a micro investment from the state.
Finally, there would be benefits for businesses that hired veterans, new employees, or kept existing employees.
According to Schiavoni, his plan better utilizes the money that taxes would have brought in than how it is currently being used.
“If we don’t do this, we’re going to continue lag in job growth, we’re going to continue to see these numbers that you’ve seen in these last few years where we’re not doing as well as the rest of the country,” he said.
Schiavoni expects to introduce his bill this fall.