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Low- and middle-income
Ohioans pay more of their income in state and
local taxes than do the state's most affluent citizens. But the state's
income tax helps offset a good deal of this inequity. The more you make,
the higher rate you pay, up through a series of nine steps. Income over
$200,000 is taxed at a 7.5 percent rate. This progressive tax is under
attack. Proposals have been made that would reduce the top rate
significantly, while raising the amount that middle-income Ohioans would
have to pay. The Ohio Department of Taxation recently analyzed one of
these proposals at the request of Rep. Sally Conway Kilbane. It found that
the proposal would shift $1 billion in taxes from those making over
$100,000 a year to those who earn less than that.
Tweaking this proposal
may reduce the amount, but the effect will be the same: To shift taxes
from those who can easily afford them to those who are less able to do so.
Ohio should be moving in the opposite direction. The proposal would
eliminate income taxes for some of the poorest Ohioans, but other ways can
be found to accomplish that goal.
The taxation department
sharply criticized the plan because once a taxpayer moved into a higher
bracket, all of his or her income - not just the income over that
threshold - would be taxed at the higher rate. For instance, a married
couple filing taxes jointly with income of $45,000 would pay $1,125. But
the same couple making $1 more would pay $1,755.04. "ODT cannot
support a tax system that imposes huge additional tax burdens for small
increases in income," the department wrote in a March 10 analysis.
Below are links to that
analysis and to another ODT study that shows how taxpayers at different
income levels would be affected by the proposal.
Review
of Proposed Three Bracket Income Tax - Ohio Department of Taxation, March
10, 2004
Distributional
Analysis of the Proposed Three Bracket Income Tax - Ohio Department of
Taxation, March 31, 2004
Ohio
news coverage about this issue:
GOP
Proposal Shifts Tax Burden
Cleveland Plain Dealer,
April 6, 04
GOP
Plan to Change Income Tax Rejected
Columbus Dispatch, April
7, 04
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