OHIO NEEDS A FAIR TAX SYSTEM.
NOT HUGE TAX BREAKS FOR THE WEALTHY
While the Householder scandal makes headlines, the biggest political rip-off of Ohio taxpayers continues
unabated. Ohio taxpayers with the highest incomes pay an incredibly low percentage of their income in
state and local taxes compared to other Ohioans. Ohio’s “upside-down” tax policy is clearly unfair –
especially when the income of the wealthy has risen much faster than other segments of the population.
As the accompanying graph shows, most Ohio families pay 10% or more of their income for state and
local taxes. But the taxpayers in the top one percent (making over $500,000 a year) pay an average of
6.5%. Most families pay 60% or more of their income for state and local taxes than a family earning $1
million. Ohio is essentially subsidizing its wealthiest with tax breaks totaling billions of dollars a year.
Ohio’s “upside-down” tax system is the result of policy decisions, mainly at the state level. The only
taxes in Ohio that are truly based on ability to pay are income taxes, primarily the state income tax. Other
taxes such as sales taxes and property taxes are regressive, meaning that people with lower incomes pay
more as a percentage of income than the wealthy. Over the past 15 years, Ohio greatly reduced what the
wealthy pay in state income taxes, often doing so by underfunding public schools and local governments
which rely primarily on regressive taxes.
The pandemic will greatly exacerbate the inequity. COVUD-19 has had little impact on the super-rich
who do not have to leave home to work and hold much of their wealth in stock investments which have
skyrocketed. The poor and middle class, in contrast, are facing widespread financial hardship, losing jobs
or businesses while still having to feed their families and pay rent or mortgages.
State and local governments will almost certainly have to increase taxes and reduce services in order to
balance their budgets since tax revenue has fallen while expenses increased due to the pandemic. Unless
our legislature requires the ultra-rich to begin paying a fairer share of state and local taxes, the wealth and
income gaps between the top 1% of Ohioans and the rest of us will only increase.
Tax breaks for the wealthy were supposed to spur economic growth. In fact, Ohio has lagged most other
states in terms of economic growth and job creation. We need to reverse Ohio’s “upside-down” tax
system so that it is based on income, the ability to pay. Investment in public education, healthcare and
infrastructure is what will drive economic growth for decades, not huge tax breaks for the top 1%.
If the state took back the income tax breaks that it has given to the top 1% since 2005, it would have some
$3.5 billion more in tax revenue annually. That probably would be more than enough revenue to balance
the budget this year. It would assure more funding in the future for public schools, healthcare and capital
improvements at the local level. It might even be enough to reduce sales and property taxes During a
pandemic, Ohio doesn’t need more taxes on hard-working families. It needs a fair tax system.