Ohio

National Taxpayers Union Joins Opposition to Kasich’s Energy Tax Hike

Organizations

The National Taxpayers Union (NTU), the largest and oldest taxpayer advocacy group in the nation, delivered an open letter to Gov. John R. Kasich opposing his controversial proposal to hike taxes on energy companies and use the increased revenue for an income tax rebate. The proposal, which would quadruple the state’s severance tax rate on shale oil and natural gas, was crafted to be revenue-neutral, but has met resistance from some conservatives.

In the June 5 letter, NTU Vice President of Government Affairs Andrew Moylan wrote that “the time for reducing Ohio’s onerous income tax is ripe, but lawmakers should look to do so without resorting to tax increases elsewhere — increases that will ultimately prove counterproductive to the brighter future you seek for your state. We urge you to abandon energy tax hikes and instead pursue common-sense trims to spending.”

Moylan cited a 2011 Kleinhenz Associates study estimating the newly discovered Utica Shale oil reserves could increase taxable wages by over $12 billion and create up to 200,000 new jobs in Ohio. To compare, Kasich’s tax increase proposal would yield approximately $1 billion, for an estimated $46 per person in individual tax rebates.

Moylan also wrote that “the proposal [Kasich has] crafted would cancel out many positive effects of an income tax reduction by enacting harsh tax hikes on the oil and natural gas industry. By singling out Ohio energy production for higher taxes, your plan imperils development of a key sector of the economy that could provide thousands of new jobs and a windfall in state tax receipts.”

Matt Mayer, former president of free-market Ohio think tank The Buckeye Institute and a Heritage Foundation Visiting Fellow, voiced agreement with NTU and provided an additional statement about the tax proposal:

Why should you care? Because yesterday it was ignoring the Ohio Constitution to grab more casinos taxes and taking funds from local governments; today it is higher taxes on Ohio’s energy industry; rest assured, tomorrow it will be another industry who can afford to pay more to keep government spending high. If Governor Kasich wants to cut Ohio’s state income tax for his reelection year, then he should cut Ohio’s grossly out of control general revenue fund expenditures (up 144% over 22 years) that have outstripped inflation by 2% on average every year from 1990 through 2013. Governor Kasich should be fighting for a net reduction in taxes for ALL Ohioans, not unfairly picking tax winners and losers among Ohioans.

Mayer was one of several Ohioans quoted in a June 3 Columbus Dispatch article airing conservative grievances with Kasich’s policies. The NTU letter also follows a June 3 Fortune magazine story criticizing Kasich’s economic plans as “Obama-like.”

Earlier this year, taxpayer-advocacy organization Americans for Tax Reform (ATR) announced Kasich’s severance tax proposal was compliant with the ATR Taxpayer Protection Pledge. ATR noted that the group “would prefer the tax cut be accommodated by cutting spending, rather than raising taxes elsewhere.

The energy-tax increase proposal was originally part of Kasich’s Mid-Biennium Review package of state budget revisions, but was removed by legislators for further consideration. Representative Ron Amstutz, chairman of the House Finance and Appropriations Committee, believes it is unlikely the proposal will be brought up for discussion this year.

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