Another gift to the wealthy
Posted June 07, 2024 in Press Releases
Even the nation’s highest sales tax would only recoup half the revenue lost to income tax repeal
New data confirm that a proposal to eliminate Ohio’s personal income tax would be yet another handout to the wealthiest Ohioans, do little for the majority of filers, and require a highest-in-the-nation sales tax to recoup even 50% of the lost revenue.
In a new brief, Policy Matters Ohio’s Bailey Williams used data from the Institute on Taxation and Economic Policy (ITEP) to illustrate just how harmful the proposal would be. The annual cost would top $11 billion, with nearly 70% of that value going to the highest-income 20%, with incomes over $133,900.
Households with annual incomes over $677,000 would get an average cut of $38,737, while Ohioans making less than $26,050 receive no benefit from this tax cut since they do not pay income tax.
“This is an extreme version of what Ohio’s leaders have been doing for decades: doling out tax cuts for the wealthiest at the expense of public services and working families who actually need some help,” Williams said.
“Without a plan to recoup lost revenue, the state would have to cut nearly a quarter of its spending — the equivalent of completely eliminating funding for K-12 schools,” said Williams. “Of course, the proposal to make up the deficit with a sales-tax hike is absurd on its face,” he added, noting that raising Ohio’s sales tax to 8.07% — the highest in the nation — would at best make up just 50% of lost revenue.
The brief also compares Ohio’s current tax structure to those of three “low tax” states and three “high tax” ones. “When you look at state and local taxes together, the ‘low tax’ image of states like Florida, Tennessee and Texas is a mirage — except for high-income households,” Williams said.
“For too long, Ohio’s leaders have bent over backwards to meet the demands of the rich,” Williams said. “This latest proposal is more of the same, at an even larger scale. The effects would be devastating for Ohio and Ohioans.”