MOUNT VERNON — Some Ohioans will be getting a bit of a financial boost in 2008 in the form of an increase in the minimum wage, and all Ohioans will be taking home a little more of their paychecks this year.
But at least one local worker who earns minimum wage isn’t impressed.
The recently increased state minimum wage applies to employers that annually gross over $255,000. There is a different minimum wage scale for workers employed by a company that earns less than that amount as well as for 14- and 15-year-old workers. For these categories of employees, the minimum wage is the same as the federal minimum wage. That rate is currently $5.85 per hour and will rise to $6.55 on July 24.
Teresa Burris, 60, of Mount Vernon, an employee of the Coshocton Avenue Goodwill store, said she thought the increase in the minimum wage was a good thing when she learned about a few weeks ago. But, she added, a 15-cent-an-hour raise is not enough to keep up with the rising cost of living — higher gas prices, electric bills and groceries.
“It’s hard to make it with prices these days, with oil going over $100 a barrel,” she said. “But every little bit counts.”
The state’s minimum wage increased by 15 cents to $7 per hour on Jan. 1 for non-tipped employees, and to $3.50 per hour for tipped employees, plus tips. A constitutional amendment passed by voters in November 2006 dictates that the state minimum wage shall increase on Jan. 1 of each year by the rate of inflation.
The new year also ushered in another series of cuts in the state tax rates. The witholding rate for the state income tax decreased by 4.2 percent from 2007, another step in a 21 percent, across-the-board income tax cut that will be complete in 2009.
A family of four earning $60,000 a year will save about $87 for the 2008 tax season, or $350 compared with 2004 tax rates.
“Oh, that’s so generous,” Burris said. “That doesn’t amount to anything. Not a thing. Spread that over 365 days a year and see how far it goes.”
The new income tax rates are part of a package of tax reforms enacted by the Ohio General Assembly in 2005 and included in Gov. Ted Strickland’s 2008-09 budget.
The reforms also include a change in the way businesses are taxed. For instance, 2008 will be the last year most business owners face a tax on tangible personal property, such as machinery, equipment, furniture, fixtures and inventory. Business owners dislike the property tax, which dates back to 1846, and many feel it is a disincentive to investment.
However, under the rerforms, the tangible property tax was replaced by the CAT (commercial activity tax). The CAT, a tax on gross receipts, will rise from 0.156 percent to 0.208 percent on April 1. The CAT is being phased in to partially offset lost revenue from the phase out of the corporation franchise tax and the elimination of taxes on the tangible personal property of most businesses.
According to the Ohio Department of Taxation, several major studies of the state’s tax system over the last 40 years have been critical of the tax for hurting the state’s ability to compete for jobs, particularly manufacturing jobs.
Tax commissioner Richard Levin said the hope is that eliminating this tax will encourage investment in Ohio.
Other major changes in the 2008 year include a bill the governor signed into law on Dec. 20 that will exempt military pensions from the state income tax starting Jan 1.
