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Business Groups Weigh Kasich’s Tax Proposal

As Gov. John Kasich’s budget moves through the Statehouse, lobbying groups are meeting with lawmakers, talking with the governor’s office and giving testimony. Among the more controversial pieces is Kasich’s proposal to cut the state’s sales tax and extend it to include services, most of which are currently untaxed. For Ohio Public Radio, WCPN's Nick Castele reports business group lobbyists are weighing how to respond.

The County Engineers’ Association of Ohio hasn’t taken a position on Kasich’s tax proposal. Executive director Fredrick Pausch says the transportation bill is a bigger concern for his members. He says he and other lobbyists know there’s still plenty of time for the tax proposal to undergo changes.

“I think you’re old enough to remember the old Schoolhouse Rock (song), ‘I’m Just a Bill.’ Just keep in mind that currently, this is just a bill. This is a proposal from the governor’s office, and it still has to go through the House of Representatives and the State Senate,” says Pausch.

But Carter Strang of the Cleveland Metropolitan Bar Association is clear on where attorneys stand on having their services taxed: No way are they for it. His group testified before lawmakers this week.

He says the state should consider legal fees an “essential” service that ought to be exempt from the sales tax – as healthcare and daycare already are.

“Keeping falsely accused people out of prison, gaining child custody, getting benefits for veterans and getting divorces for abused spouses. I could go on and on. Those things, number one, are essential,” says Strang.

Several business groups have come out against the proposal, such as the American Council of Engineering Companies of Ohio, the American Institute of Architects of Ohio and the Ohio Association of Realtors.

But others are hanging back.

The Greater Cleveland Partnership says it might take several weeks to come to a decision. First it has to survey its Northeast Ohio members and assess how they would be affected.

Kasich spokesman Rob Nichols says the governor knew this would be a tough fight.

“We’re taking on lawyers, and lobbyists, and lobbyists for lawyers. But the fact of the matter is that we need to become a lower tax state,” says Nicols.

And broadening the sales tax base allows the state to offer big income tax cuts.

Nichols says the administration is open to negotiating – but it’s also looking for all the support it can muster.

During an event last month to promote the budget, Kasich even interrupted a CEO to call out one interest group by name.

“Are you a member of NFIB? National Federation of Independent Businesses, the small business community? You know they have not supported this plan yet? Maybe you ought to call them,” Kasich asked at the event.

Roger Geiger is the executive director of the NFIB in Ohio. He says he surveyed his members. And they’re split.

“Forty-eight percent of our members support the governor’s plan as it’s currently presented. Forty-one percent of our members oppose. And the rest are undecided.”

Geiger says his members like the other part of Kasich’s tax plan, the 20 percent income tax cut for individuals and 50 percent tax cut on small business income. But they’re not keen about paying sales tax when they have to hire attorneys and accountants to do business, he says.

For now, Geiger says, the NFIB is holding back on staking out a position. He says the group would like to talk about ways to pay for the tax cut besides levying taxes on business services.

After all, as Fredrick Pausch told me, this is just a bill.