Ohio income-tax cuts would reward the wealthiest
Posted June 29, 2021 in Press Releases
General Assembly lards budget bill with tax breaks, while eliminating review
Income-tax cuts approved by the General Assembly in the budget bill would favor the very wealthiest Ohioans, while providing only modest benefits for moderate-income Ohioans and nothing at all to the state’s poorest. Benefiting especially from the elimination of the top bracket of the tax, the most affluent 1% of Ohioans would see an average $5,400 annual tax cut, adding up to well over a third of the total cuts.
Those are the key conclusions of an examination of the tax cut prepared for Policy Matters Ohio by the Institute on Taxation and Economic Policy (ITEP), a Washington, D.C., nonprofit with a sophisticated model of state and local tax systems. Meanwhile, the budget calls for the creation or expansion of tax breaks worth hundreds of millions of dollars — and the elimination of the Tax Expenditure Review Committee (TERC), which is supposed to review such breaks. Gov. DeWine should veto these changes in tax policy, along with other elements in the budget bill outlined in this blog item.
“Instead of lavishing the wealthy and corporations with additional giveaways, these funds would be better used to create an inclusive and vibrant recovery for Ohio’s people,” said Zach Schiller, Policy Matters research director and author of the brief. “Altogether, the tax cuts and breaks will cost more than $2 billion over the next two years that could be put to much better use.”
ITEP found that the 80% of taxpayers with income below $107,000 a year will get just 23% of the income-tax cuts; on average they will receive a cut of just $43 a year.
“Without veto action by DeWine, the legislature will send a windfall to the wealthiest Ohioans while draining revenue the state needs to get back on track after the pandemic,” Schiller said. “He should also ensure that the $9 billion in annual tax breaks get a regular review, instead of allowing the TERC to be scrapped.”