Gov. John Kasich said on Friday that Ohio’s taxes are too high and was exploring a plan to lower state income tax.
Kasich said that he wanted to lower the income tax rate by increasing the amount out-of-state oil and gas companies by in severance taxes.
According to Kasich, the amount of tax that oil companies pay for what they drill out of the ground in Ohio has not changed in more than 40 years. Companies currently pay 20 cents per barrel.
“Remember, that’s two dimes, that’s 20 cents they pay,” Kasich said.
The governor said that he wanted out-of-state companies to pay more.
“When people realize what this plan is, which is out-of-state oil companies pay more, and all Ohioans pay less and it improves our business environment, that’s a fantastic story,” Kasich said.
Kasich said that his plan to increase the severance tax would reduce income tax by $500 million each year within a few years. He said the plan also would help create jobs.
Kasich also said that the plan would not affect small gas and oil companies. Taxes would be eliminated for small Ohio state gas producers, and there would be no change in taxes for conventional oil producers.
“This is absolutely a tax cut for all Ohio, and it isn’t Ohioans that are really impacted by the severance tax, to be perfectly honest, Kasich said. He said that the severance tax hike would affect mostly high-volume drillers based outside of Ohio.
Critics of Kasich’s plan said that taxing the out-of-state gas and oil companies would force them to leave the state or keep them from coming here to do business.
The Ohio Oil & Gas Association said that if taxes are raised, hundreds of thousands of Ohio-based energy companies and landowners would end up with huge tax bills. They also said that a survey of energy executives ranks Ohio No. 14 when it comes to being a desirable place to do business, down from No.2.
“But there’s not one of those companies, if you talk to executives, that say this would in any way discourage anybody from coming to Ohio,” Kasich said in response to the critics. “And since we’ve been talking about it, we’ve seen billions of dollars invested in Ohio. You know why? Because there’s gold in ‘thar’ hills.”
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