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

-- American Future Fund ad, Jan. 28, 2016

In this Republican primary, you’re nobody until you’re the subject of a dark-money-funded attack ad. Even before his success in New Hampshire, Ohio Gov. John Kasich had made the cut, judging by an ad labeling him an “Obama Republican,” paid for by the American Future Fund, an organization linked to the billionaire Koch brothers.

The ad’s voiceover states, “Common Core. Obama’s Medicaid expansion. Tax increases. Barack Obama? No. John Kasich. Kasich still supports Common Core. Kasich was one of the few Republican governors to cheerlead Obamacare’s Medicaid expansion, and Kasich’s budget raised taxes by billions, hitting businesses hard and the middle class even harder. John Kasich. Not a conservative. Not even a moderate. An Obama Republican.”

It’s the statement about raising taxes by “billions” that raised our fact-checking antennae.

But first, the other claims. On Common Core, the school boards and administrators in most states have used the national initiative as a model on which to base their own standards. Kasich has been steadfast that curriculum decisions in Ohio schools are made at the local level. It’s true that his statements on Common Core are far from the condemnation coming from the rest of the Republican field. On the Affordable Care Act, Kasich opposed health care exchanges in Ohio, but did expand Medicaid, defending his decision by referencing the Bible’s commands to help the poor.

On to the ad’s criticism of Kasich’s budget proposal. Ohio’s budget goes through two-year cycles. Kasich’s 2015 proposed budget would have:

raised tobacco taxes by 35 cents, to $1.60 a pack,

created a new electronic cigarette tax,

raised state sales taxes by a half-cent,

raised the tax on oil and gas producers,

created a 3 percent flat tax on businesses income above $250,000.

These tax hikes were intended to offset the key element in Kasich’s plan: a sweeping income tax cut. And tax policy analysts from the left and the right both defined it as such.

Economist Scott Drenkard, with the business-backed Tax Foundation, panned Kasich’s plan for shrinking Ohio’s tax base.

A more left-leaning policy research institute, Policy Matters Ohio, also identified Kasich’s plan as a tax cut, and was critical of it for rewarding the wealthiest taxpayers the most. According to their February 2015 report, the richest top 1 percent of Ohioans would see $11,906 in tax savings, and the next 4 percent would see an average savings of $890. But the bottom 20 percent of earners could expect to pay an average $116 more.

“To say his budget raised taxes by billions is a wild overstatement, to me,” says Zach Schiller, research director of Policy Matters Ohio. Kasich’s budget “raised taxes by billions, before it cut them by even bigger billions.”

The next element of the attack ad’s claim is that Kasich’s budget hurt Ohio businesses. But Schiller says that’s questionable as well. “His proposal would have increased taxes that businesses themselves pay. You could possibly debate that,” Schiller says. “But it included a big cut in the income taxes for the owners of those businesses.”

Schiller also takes issue with the statement from the ad about hitting middle-class Ohioans “even harder.”

“What you find is, the people at the top, making the top 1 percent, are getting many thousands of dollars a year in tax cuts,” Schiller adds. “The people in the middle are either breaking even or seeing modest increases, and the people at the bottom are seeing modest increases.”

Ohio’s Department of Taxation provided PolitiFact with a table showing net tax reductions by year through Kasich’s tenure as governor, from 2012 through 2017. The net savings resulting from the 2015 budget comes to $1.88 billion.

Our ruling

An ad from the American Future Fund said, “Kasich’s budget raised taxes by billions, hitting businesses hard and the middle class even harder.”

His budget did raise taxes, but then it cut taxes by billions.

The biggest increase in Kasich’s plan, a bump of $1.5 billion over two years, is the sales tax increase. That increase offsets Kasich’s income tax cuts, which total $1.88 billion over the same two-year period.

The ad said these tax increases hit businesses hard. Some businesses -- the biggest ones -- would see a flat tax rate increase of 3 percent. But the income tax cuts reward the most affluent Ohioans -- many tied to big businesses -- with thousands of dollars in tax breaks.

Were middle-class Ohioans hit the hardest? Most would break even or see a slight tax increase. It would have been more accurate to say that the poorest taxpayers would gain nothing from Kasich’s tax restructuring. But that wouldn’t make for much of an attack ad.

We rate this statement False.

Sources

Blog, Huffington Post, “John Kasich Tells Critics of Medicaid Expansion to Read the Bible,” October 7, 2015

“Ohio Politics Now: What we know about Gov. John Kasich’s budget proposal,” Columbus Dispatch, Feb. 2, 2015

Net Tax Reductions, FY 2012-2017, Ohio Department of Taxation

Blog, “Gov. Kasich’s plan may be a tax cut, but it’s still poor policy,” TaxFoundation.org, Jan. 30, 2015

Interview with Zach Schiller, research director, Policy Matters Ohio, Feb. 9, 2016