October 13, 2009
October 13, 2009
In order to balance the Ohio state budget, Gov. Ted Strickland has proposed temporarily restoring the last year of a five-year, 21 percent income-tax cut approved in 2005. This October 2009 report examines the effects of implementing the governor’s proposal together with two other measures that would raise income-tax rates on the most affluent: Restoring the 7.5 percent rate on annual income over $200,000, and creating a new, 8.5 percent bracket for income over $500,000 (sometimes known as a “half millionaire’s tax”). The analysis relies on the Institute on Taxation and Economic Policy, a Washington D.C.-based research institute with a sophisticated model of state and federal taxation systems.
According to the ITEP analysis, combining the governor’s proposal with the increases for the highest-income Ohioans would generate more than $950 million a year. Almost $600 million, or more than three-fifths of that amount, would be paid by Ohio taxpayers in the top 1 percent of the income spectrum. By contrast, the four-fifths of Ohio taxpayers making $76,000 or less a year together would pay just 14 percent of the total tax increase. On average, taxpayers in the middle fifth of the income scale – those making between $32,000 and $49,000 a year – would have to pay an additional $37 a year, or less than one tenth of one percent of their annual income. Lower-income taxpayers on average would pay less than that.
Restoring the necessary revenue to meet the needs of Ohioans and operate Ohio government can’t be done with the income tax alone. But stronger income tax is a cornerstone of a sound budget strategy for Ohio.
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