Lawyers and Lobbyists Likely to Have Income Tax Deduction Restored in Bill Giving Deductions to Teachers

 

When the biennium budget was passed in July, a last minute provision added in Conference Committee took away the Business Income Deduction (BID) from two specific groups – lawyers and lobbyists. The deduction may be returned thanks to Senate Bill 26, a bill originally designed to give teachers a write-off when they spend unreimbursed money for their classrooms.

The BID exempts from taxation the first $250,000 earned by a business. No other businesses are exempt from the deduction.

The original move to take the lawyer and lobbyist deduction away did not go unchallenged. State Senator Matt Huffman (R-Lima), likely to be the next Senate President, lashed out at the language and questioned its Constitutionality on the basis of the Equal Protection Clause. As reported by The Ohio Star, Huffman discussed the basis for singling out the two types of businesses on the floor of the Senate in his speech about the budget,

It’s difficult to tell what [the rational basis] is because we haven’t had any hearings on this; there’s no public testimony. So really we don’t know what the basis is at all, much less a ‘rational basis’ which is what courts will use in determining whether this is a violation of Equal Protection.”

A statement from the Ohio Bar Association’s CEO Mary Amos Augsburger declared, “This amendment, which was crafted behind closed doors with no opportunity for public debate, is not only constitutionally flawed but poorly drafted. It will lead to many unintended consequences, raising taxes not only for the intended targets of the amendment—lawyers and government affairs professionals—but potentially all who employ them.”

Another addition to Senate Bill 26 is the elimination of the commonly-referred-to “pink tax” which is sales tax of feminine hygiene products. The analysis of the version passed by the Senate said simply,

Allows teachers to claim an income tax deduction of up to $250 for amounts paid out- of-pocket for professional development and classroom supplies.”

The Cleveland Plain Dealer reported the bill sponsor, Senator Stephanie Kunze (R-Hilliard), was uncertain whether she would support all the changes when the Senate votes on concurrence.

The paper also shared comments from Speaker Larry Householder, widely believed to have been the impetus for the language singling out the two business groups. It stated, “[He] said the lawyer and lobbyist change was made since there is no way for the Ohio Department of Taxation to determine whether someone is a lawyer or lobbyist — and whether they have a tax liability. State income tax forms don’t ask occupation, unlike federal forms.

The Speaker was quoted as saying, “There was no way for them to enforce it,” and that “the policy change was also an issue of fairness.”

– – –

Beth Lear is a reporter at The Ohio Star.  Follow Beth on Twitter.  Email tips to [email protected].

 

 

 

 

 

Related posts

Comments