Flat tax would make most Ohioans pay more
Posted January 05, 2017 in Press Releases
New report shows top 1 percent would get a big break on state income taxes
Jenice Robinson, Institute on Taxation and Economic Policy, 202.299.1066 x 29
If Ohio’s General Assembly flattened the state’s tiered income tax to a single rate of 3.5 percent, the vast majority of Ohioans would pay more on 2016 earnings than they do now, while the richest 1 percent would get another big tax break every year, a new study finds. The General Assembly created the 2020 Tax Policy Study Commission in 2015 in part to recommend how to transition to a flat state income tax rate of 3.5 or 3.75 percent. Using a sophisticated model of Ohio’s tax system, the national research group, Institute on Taxation and Economic Policy (ITEP), found that with a 3.5 percent flat tax, 72 percent of Ohioans would pay more state income tax, while just 4 percent would pay less. The remaining 24 percent would pay the same amount as they do now. Results are similar with a flat tax rate of 3.75 percent: 74 percent would pay more. Ohio, like most states, has a progressive income tax, under which rates increase on new income as income rises. Rates rise gradually to just under 5 percent on income greater than $210,600 a year. At a 3.5 percent flat tax the top 1 percent of earners, with incomes greater than $397,000 a year, would get tax cuts averaging more than $4,000 per year. The bottom four-fifths of taxpayers
Policy Matters Ohio is a nonprofit, nonpartisan state policy research institute with offices in Cleveland and Columbus.