Senate Republicans outline own tax package

by John McCarthy
THE ASSOCIATED PRESS

COLUMBUS — Majority Republicans in the Senate, concerned about tax cuts proposed by their counterparts in the House, announced their own tax package on yesterday that focuses on credits for families and the estate tax.

Senate President Richard Finan joined Sens. Robert Spada of Parma Heights, Robert Latta of Bowling Green and other Republicans at a news conference to outline the package, which would return $345.7 million to taxpayers this year.

The bill, introduced by Spada, would increase income tax exemptions — the taxable amount families are allowed to subtract from their income for each member — by $500 to $1,600 each. The estimated cost to the state would be $187 million this year.

It also would raise the credit for filing joint income tax returns on a scale that decreases from 20 percent of the total tax for couples making under $25,000 to 5 percent for couples making over $75,000. The estimated cost for this year would be $78.7 million.

With those two provisions, a family of four making $28,000 a year would save $75 this year, while a family making $60,000 would save $100, Spada said.

The bill also would eliminate the state's share of the estate tax for a decedent's estate worth up to $675,000 — the federal exemption on such taxes. Ohio currently begins taxing estates at $25,000.

The estate tax is split, with the state getting 36 percent and local governments 64 percent of what the state collects. Only the state share would be affected; the local share would still begin at $25,000. The estimated cost of that provision would be $80 million this year.

The Republicans said the estate tax is particularly objectionable because it adds to the grief families must endure when they lose loved ones. Latta, a lawyer, said he often discusses the tax with clients. Ohio is one of just a few states with an estate tax so severe, he said.

''It was very hard to tell clients, in some circumstances, to move to another state,'' he said.

Finan, of Cincinnati, said the tax package was in response to a House amendment to the state construction bill that cleared that chamber on Tuesday. The bill, now pending in the Senate, included a provision that prevents the state from dipping into the Income Tax Reduction Fund.

Under the amendment offered by Jeff Jacobson, a Phillipsburg Republican, Ohioans would receive at least a 5 percent tax cut if Ohio takes in $380 million above its estimated revenue projections.

Finan said he prefers the Senate plan because it's based on targeted numbers instead of a formula that makes cuts ''unpredictable.'' He said the House amendment put political pressure on Senate Republicans to act.

''Once the tax cut fever begins, it is difficult to stop the train,'' Finan said. ''The House put a tax-cut proposal on the floor. It's there and it now has to be dealt with. ... We can't sit around in the Senate and just be benign about these kinds of things.''

House Speaker Jo Ann Davidson, a Reynoldsburg Republican, said she would try to work toward a compromise with the Senate.

''I've indicated to them that I want to work with them. All of the things in Spada's proposal, as I understand them, are things that everyone has discussed,'' Davidson said.

Rep. Jim Jordan, an Urbana Republican who supports Jacobson's amendment, said the details of both remain to be worked out, but that he's happy to see competing plans.

''This is 'God Bless America,' apple pie and a great day for taxpayers. I'm just tickled pink,'' he said.

Gov. Bob Taft, also a Republican, would prefer to wait until the Ohio Supreme Court rules on whether the state's school-funding formula is constitutional - or whether the state must do more to equalize it - before supporting more tax relief, spokesman Scott Milburn said. The court is expected to rule soon.

Senate Minority Leader Ben Espy, a Columbus Democrat, said he welcomed the Republicans' ''election-year conversion'' on tax issues that Democrats previously proposed.

Meanwhile, Espy and Sen. Leigh Herington, D-Rootstown, said they would introduce a bill that would change the state motto to ''In God we trust.''

The 6th U.S. Circuit Court of Appeals on April 25, in a ruling on a lawsuit filed by the American Civil Liberties Union, struck down the state's current motto — ''With God, all things are possible.'' The court said that since that phrase is lifted directly from the Bible, it violates the constitutional separation of church and state.

Espy and Herington said their idea would pass muster because it doesn't directly quote Scripture.