A group called the American Future Fund is airing an ad accusing Gov. John Kasich (R-Ohio) of being "an Obama Republican." (The American Future Fund)

“Kasich’s budget raised taxes by billions, hitting businesses hard and the middle class even harder.”

ad by American Future Fund, released Jan. 28, 2016

This ad by dark-money group American Future Fund, a politically active 501(c)(4) nonprofit, attacks Ohio Gov. John Kasich over being an “Obama Republican.” You see more information about this ad at Political TV Ad Archive, which tracks and records political ads aired in key primary states.

The ad’s claim that Kasich raised taxes by “billions” stood out as suspicious. The Fact Checker previously has looked into Kasich’s record on taxes and found there was a net tax decrease of nearly $5 billion in the state. What’s going on?

The Facts

The ad attacks Kasich’s record on three issues: Common Core, Medicaid expansion under the Affordable Care Act, and taxes.

The argument against Common Core as a federal curriculum coercion backed by the Obama administration is misleading. Governors and school chiefs in most states crafted standards through the Common Core national initiative. States can decide to adopt the standards, revise them then allow school districts to choose their curricula.

Regarding Common Core, Kasich has maintained it was a state decision to adopt higher education standards. As for allowing Medicaid expansion in Ohio, Kasich has said it would help Ohio’s poorest residents. He opposed ACA exchanges in Ohio.

On taxes, the ad cites a Feb. 3, 2015, Columbus Dispatch article about Kasich’s budget proposal for fiscal year 2016-2017. He proposed cutting income taxes by 23 percent (including eliminating income taxes on many small business owners), while raising the state sales tax by another half a cent to cover the cost of the income tax cuts.

American Future Fund founder Nick Ryan pointed to each of the proposed sales tax increases, including higher taxes on bigger businesses, a cigarette tax increase and a new tax on electronic cigarettes, and tax increases on oil-and-gas drillers, the Columbus Dispatch reported.

But overall, Kasich’s budget would have resulted in a net tax savings for Ohioans.

Of course, the actual budget enacted in June 2015 looked different from Kasich’s wish list. The state General Assembly scaled back Kasich’s income tax cut, and set aside his request for sales tax increases. Compared to Kasich’s budget, the enacted budget had a smaller cigarette tax increase and larger net tax savings.

Kasich’s sales tax increases, mainly in cigarette taxes, would have hurt low-income residents, said Zach Schiller, research director at the  progressive policy research institute Policy Matters Ohio. Overall, lower-income Ohioans have “not benefited gigantically” from Kasich’s tax policies, Schiller said.

Still, Schiller said: “The idea that he’s out there raising taxes in some way is erroneous. … If you were trying to come up with a bullet point on Gov. Kasich regarding taxes, you would not say he’s a tax raiser.”

The impact on low-income families is an ongoing criticism by opponents of Kasich’s decision to transition Ohio’s tax system to a consumption tax-based system from an income-tax based one. The Kasich campaign acknowledged such a transition requires some tax increases, such as on sales and tobacco. But income taxes have always gone down by a greater amount, said Scott Milburn, campaign spokesman: “These changes have always been made in concert, in the same legislation. To discuss one change out of context with another is therefore deliberately misleading.”

To help offset the impact on low-income families, Kasich signed the earned-income tax credit in the fiscal 2012-13 budget and doubled it in the fiscal 2014 budget, Milburn noted. Plus, the personal income tax exemptions have been increased for low- and middle-income families.

There has been a net tax cut of $5 billion under Kasich’s governorship, according to state budget officials. The left-leaning Center for Budget and Policy Priorities found that Ohio ranks among the top five states with the biggest income tax cuts, as a share of the state’s economy.

He received a D in the libertarian Cato Institute’s 2014 Fiscal Policy Report Card, but was praised for his income tax cuts and the tax reform legislative packages he signed into law. His score was dragged down by his spending increases, the report card said. His decision to expand Medicaid under the Affordable Care Act also hurt his score.

American Future Fund did not respond to our request for comment on the net tax decreases under Kasich.

The Pinocchio Test

The ad grossly exaggerates Kasich’s record on taxes. Yes, he did increase taxes by “billions” of dollars, but he also cut taxes by billions – for a net tax decrease in the most recent state budget, and for his gubernatorial term so far. The budget that was actually enacted looked different from Kasich’s wish list, and had a greater net tax savings than Kasich had called for.

The ad says Kasich’s budget hit “businesses hard and the middle class even harder,” but that also is a misleading characterization. Kasich’s budget would have eliminated income taxes for small-business owners. While sales tax increases affect low- to middle-income families more than the affluent, the state also increased personal income tax exemptions and created the earned-income tax credit to help offset the impact.

Even Kasich’s critics agree there has been a net tax decrease in Ohio under Kasich. Perhaps American Future Fund should pick a new attack ad talking point. We award Three Pinocchios.

Three Pinocchios

 


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