Kasich's Ohio Collected More in Taxes Than it Spent -- Is That a Good Thing?


Should we be happy that a state government is bringing in more money than it spends?

It’s a surprising question given the ongoing discussion of this country’s national debt crisis. Yet this past year, Ohio collected more in taxes than it needed.

The state wrapped up fiscal year 2018 in June and reported a $657 million budget surplus. Prudently, it deposited the surplus into its rainy-day fund to protect against, you guessed it, rainy days.

Now with projections of a surplus for fiscal 2019, Gov. John Kasich wants to top off the rainy-day fund (by law its maximum balance cannot be more than $2.75 billion) and wants to lower payroll tax deductions to allow Ohioans to keep more of their paycheck rather than waiting for a tax refund next year.

This is an unusual position for a government to be in — debating how to give back its citizens more of their hard-earned money. Typically, government is looking for ways to take in more money from taxes, not less.

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So how did Ohio end up with a surplus when just a year ago, it was hearing that the Kasich tax cuts caused the state to collect less money than it needed?

A majority of the money is a result of more Ohioans working. At the end of fiscal year 2018, the state collected $433.8 million more in income taxes than expected from Ohioans. With substantial job growth in the first half of 2018, it is no surprise that Ohio is collecting more in taxes.

And what spurred this growth in jobs? Key factors are Kasich’s tax cuts and the federal tax cut, which created a pro-growth economic climate and encouraged job growth.

There were questions over whether the Kasich tax cuts were beneficial for the state. Yet, fast forward one year and we see the benefits of the governor’s tax cuts and the federal tax cuts. Without these tax reforms, Ohio would not have seen the growth in jobs and would be in a much worse position – more money in taxes being taken from our paychecks, fewer businesses being started, and fewer jobs being created.

Is this a great example of how tax cuts can increase tax revenues?

So, back to that original question. Should Ohio residents be happy that its state government is bringing in more money than it spends?

Yes and no.

Higher revenue is a sign that Ohio’s economy is growing, which is good news. However, government should not take more of its citizens hard-earned money than it needs to provide services and conduct the business of the state.

Keeping this surplus money would derail Ohio’s economic growth and put its gains at risk. Putting it back in the hands of Ohioans will enable people to start more businesses, expand existing ones, hire more workers, and create more economic prosperity for itself and its communities.

Andrew J. Kidd, Ph.D., is an economist with The Buckeye Institute’s Economic Research Center. This piece originally appeared on

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