Proposed Senate tax cuts would go mostly to the affluent
Posted June 03, 2021 in Press Releases
Analysis finds they would do little for most Ohioans
The Ohio Senate proposal to cut income-tax rates by 5% would favor the richest Ohioans without doing anything to help Ohioans making less than $22,000 a year, according to a study Policy Matters Ohio released today. In that, the measure is similar to the 2% reduction approved by the House – except it would grant greater cuts to the most affluent while still doing little for most Ohioans.
The study of the proposed tax cut included in the Senate budget bill is based on an analysis for Policy Matters by the Institute on Taxation and Economic Policy, a Washington, D.C., nonprofit with a sophisticated model of state and local tax systems. It found that the top 1% of Ohio tax filers, with income of at least $526,000 a year, in total will get more than three times as much in tax cuts as the bottom three-fifths of taxpayers with income below $64,000.
“The $874 million the tax cut will cost would be better spent finally ensuring all Ohio children can attend a fully and fairly funded public school,” said Zach Schiller, Policy Matters research director. “It could also get a little more money into the pockets of low-paid-working Ohioans by making the Earned Income Tax Credit refundable.”
Taxpayers with incomes of $22,150 don’t have to pay Ohio income tax, though on average such taxpayers pay a larger share of their income in overall state and local taxes that the richest Ohioans do. “This means they will get nothing from the tax cut,” Schiller noted. Middle-income Ohioans also will get little: ITEP found that the middle fifth of Ohio tax filers, with incomes between $41,000 and $64,000 a year, will average an annual tax cut of just $22. Meanwhile, the top 1% will average a cut of $1,712.
“Pay for some of the jobs hardest hit by the pandemic, such as waiters and waitresses, is so low that they will get little or nothing from the proposed cut,” Schiller said. “Instead of more tax cuts directed largely at Ohio’s wealthiest, policymakers can support working families by making child care more affordable.”