Ohio tax structure contributes to racial inequity
Posted January 11, 2019 in Press Releases
New research underlines need to overhaul state tax code
Ohio’s upside-down tax system takes an especially heavy toll on black and Latino residents. That’s the finding of new research from the Institute on Taxation & Economic Policy (ITEP), a national nonprofit research group with a sophisticated model of the tax system, that was released today by Policy Matters Ohio.
Lower-earning Ohioans pay a greater share of their income on average in state and local taxes than high-income Ohioans do. Long-standing structural barriers in education, housing and at work add up to black Ohioans and Latinos being more likely to have lower incomes than white residents. Therefore, they are more likely to pay higher state and local taxes. Conversely, white people are more likely to earn higher incomes – and affluent Ohioans average lower taxes.
ITEP found that 27 percent of black Ohioans and 40 percent of Latinos are in the poorest fifth, who earned less than $19,000 in 2018 and whose total state and local taxes amounted to 12.3 percent of their income. Only 8 percent of black residents and 7 percent of Latinos are in the top fifth of all earners, who earned at least $92,000 and average just a 7.7 percent tax rate. By contrast, 18 percent of whites are in the poorest fifth and 22 percent are in the richest fifth.
“This underscores the need for an overhaul of Ohio’s state and local tax system,” said Zach Schiller, Policy Matters Ohio research director. “We can raise the revenue we need to fully fund public schools, public transportation and other important services while breaking barriers that still remain for many Ohioans of color. A good place to start is boosting the income tax on the state’s top earners.” Policy Matters proposed one way to do that in a June report.