Restoring tax cuts, closing loopholes could add nearly 40,000 Ohio jobs
Posted February 18, 2019 in Press Releases
By rolling back tax cuts for the wealthy and closing tax loopholes that mostly benefit corporations, Ohio lawmakers could boost the state’s economy with 39,601 new jobs, $1.7 billion in increased wages and add $2 billion to the state’s GDP.
These are the findings from Policy Matters Ohio, which worked with the Regional Economic Models Inc (REMI) to project the economic impact of implementing the group’s 2018 plan to rebalance Ohio’s tax code. Since 2005, Ohio policymakers have slashed state income taxes. Tax breaks and loopholes now cost Ohio $9 billion a year. As a result, poor and middle-income Ohioans pay a higher share of their incomes in taxes than the wealthy do and the system doesn’t generate enough revenue to fully fund public services like transit, preschool, K-12 education and need-based aid for college.
Policy Matters’ tax plan, developed with the Institute on Taxation and Economic Policy (ITEP), would generate $2.6 billion in revenue by:
- Restoring the 7.5 percent income-tax rate on income over $217,400 approved in 1992;
- Adding a new 8.5 percent rate on income over $500,000;
- Repealing the ineffective business income deduction which drains more than $1 billion a year from state revenues;
- Making our state Earned Income Tax Credit refundable, removing a cap on the amount many Ohioans receive, and raising it to 20 percent of the federal amount.
“Policymakers who favored cutting taxes told Ohioans they’d kickstart the economy and create jobs,“ said report author Policy Matters Researcher Victoria Jackson. “Instead, Ohio consistently trails the nation for job growth and we’ve been slow to recover from the recession.”
REMI modeled the economic impact of directing the $2.6 billion of additional revenues into public services, including the Local Government Fund, public transit and public education from preschool to need-based aid for college.
“It’s no surprise that increasing support for things that build strong communities would help build a strong economy, too,” Jackson said. “When the people of Ohio come together for important public projects, we can do great things. Governor DeWine and state legislators should use the 2020-21 state budget as an opportunity to right the ship so we can have an Ohio where everyone has the chance to succeed.”