Ohio follows through on tax cuts: 5-year plan ends with 2009 reduction
 

Ohio's state budget is in bad shape because of the automotive industry's woes and the nation's overall recession.

But that isn't stopping the Buckeye state from proceeding with scheduled tax cuts for individuals and businesses in 2009.

The cuts are the last under a 5-year plan implemented in 2005 that reduced individual income taxes a total 21% across the board and made major changes to business taxes.

Beginning Jan. 1, Ohio's income tax will decrease 4.2%. For a married family of four in which both spouses are working and earning $30,000, the Ohio Department of Taxation says the tax decrease for 2009 will be $26 more than this year's taxes. The reduction will be $178 on $100,000 in wages and $453 on $200,000.

Families earning $10,000 a year or less pay no state income tax under the 2005 reforms.

For businesses, the state's century and a half-old tangible personal property tax finally was eliminated in 2008. The tax on inventory, equipment and related items was considered a plague by many small retail business owners. They complained that the inventory portion of the tax made it difficult to compete with bigger retailers.

Though the tax cut plans were implemented when Republicans controlled the governor's office and the General Assembly, Ohio Gov. Ted Strickland and other Democrats agree they must be allowed to go through despite the state's budget crisis. That little difference in taxes next year could be the difference that keeps some families and businesses going, they say.

Wishing you many happy returns,

Dr. Wayne T. Essex