Final Ohio Operating Budget Maintains Business Investor Deduction

Date: July 17, 2019

The preservation of the BID could not have been possible without the efforts of our members across Ohio who wrote, e-mailed, spoke personally with, and came to Columbus to testify before the Ohio General Assembly.

It has been an interesting two months at the Ohio Statehouse. The original introduced state operating budget contained no major policy changes. However, the Ohio House made a dramatic change to the Business Investor Deduction (BID) by reducing it from $250,000 to $100,000 the amount of business income pass-through entities may deduct from their Ohio taxes. This version of the bill also removed the three percent tax rate cap on all business income over $250,000. These changes are a massive tax shift onto Ohio’s entrepreneurs and job creators to the tune of over $1 billion over the two-year budget period.

On May 23, 2019, the Ohio Senate Finance Committee heard and read testimony from 16 NFIB members among the day-long hearings on sub. HB 166 (State Operating Budget). In addition to those testifying, A Call to Action went out, and messages were sent by NFIB members across Ohio reaching all 33 Ohio Senators urging them to stop the assault on the business investor deduction.

Albert Macre, a CPA from Steubenville, and NFIB member testifies on why the BID is important to small business owners.

Additionally, social media spread the message through Facebook & Twitter. Members were also updated on the NFIB webpage for Ohio, before and after the day of testimony.

Following efforts by NFIB, in The Columbus Dispatch, NFIB member Ohio Sen. Bob Peterson, R-Sabina, the No. 2 Senate leader, said he’s not sold on reducing the business tax deduction. “I and several others worked to create the small business tax deduction, and we thought that it had value in it helped job creators, helped our economy grow, helped people want to come to Ohio and invest in Ohio,” he said.

In that same article, The Columbus Dispatch also references a letter from the small-business advocate NFIB and 20 other business associations said the House tax changes were “put forth quickly, unexpectedly and without input from Ohio’s impacted business community.”

With NFIB and Republican Gov. Mike DeWine calling for the restoration of the full tax break, the Senate budget revisions kept much of the BID intact. “Our members came to Columbus and wrote their legislators to share how they are using these dollars to reinvest in their businesses, and thus Ohio. The latest budget figures show increasing tax revenues and low unemployment, demonstrating the economic stability of our state. We believe this validates the stories of our members and the success of the BID,” said Roger Geiger, Vice President and Executive Director for NFIB in Ohio.

The Ohio Senate passed version restored the $250,000 threshold and eliminated the retroactive tax increase. Senate Finance Committee Chairman Matt Dolan said the tax break creates jobs and dismissed suggestions it is a “loophole.”

Members from across Ohio attended Small Business Day at the Capitol to tell elected officials to maintain the BID.

The BID was a big sticking point in budget negotiations, and a 17-day extension was passed on June 30. Both chambers of the 133rd Ohio General Assembly continued to debate the BID. Shortly after the extension, Gov. DeWine told The Columbus Dispatch, “It’s time for us to take a deep breath and hold back from any changes… For now, let’s get the budget passed.”

“If people want to make changes so far as equity and fairness, let’s do that in a separate bill. Let’s get this budget done,” the governor said. “It’s certainly my position we should not be raising taxes on small business. … I think that would be a mistake.”

NFIB continued to make a case for the BID. All throughout the weekend leading up to the vote, NFIB was in communication with Governor DeWine and Senate President Obhof during the final negotiations to see the budget across the finish line. On July 16, the day before the budget extension ended, the final budget deal keeps the BID’s maintains the tax emption on the first $250,000 of income for pass-through entities, and the 3% flat rate on income above that. However, lobbyists and lawyers will be ineligible for the deduction.

The preservation of the BID could not have been possible without the efforts of our members across Ohio who wrote, e-mailed, spoke personally with, and came to Columbus to testify before the Ohio General Assembly. The Small business community, the economic engine of the state of Ohio spoke loud and clear and was heard.

“NFIB appreciates the commitment shown to Ohio’s small business community by preserving the business investor deduction (BID) in the final version of Ohio’s operating budget. Our members were galvanized in support and came to Columbus, contacted their legislators, met with them personally to share how they are using these dollars to reinvest in their businesses, and thus Ohio. The legislature and administration heard loud and clear from the job creators in this state,” said Roger Geiger, Vice President and Executive Director for NFIB in Ohio.

“NFIB members’ optimism is at near-record levels, unemployment is low, and job openings are posted all across Ohio. By allowing the BID to continue, it will allow Ohio’s small businesses to invest in their companies, hire additional workers, and support the communities that are so important to them. The Ohio Senate’s belief in small business and Governor DeWine’s desire to not raise taxes on entrepreneurs is truly appreciated,” Geiger concluded.

Small business had a win on the Ohio Bureau of Workers’ Compensation (BWC) budget as well. 

“NFIB supported removing the major policy proposals and passing a clean funding bill for the BWC operating budget.  Small business owners rely on the BWC’s ability to help injured workers receive timely care while considering the costs for Ohio employers,” said Roger Geiger, Vice President and Executive Director for NFIB in Ohio.

“We thank the Ohio Senate for their work on the BWC budget removing numerous policy initiatives from this appropriations bill.  By passing this budget bill today, the legislature demonstrated their commitment to injured workers and Ohio’s business community,” Geiger continued.

 

Related Content: NFIB in My State | Grassroots | Ohio | Tax Reform

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