Think Tank Says Budget's Income Tax Cut Won't Help Most Ohioans
The 3% across the board income tax cut in the state budget, along with other tax changes, won’t do much for people making less than $110,000 a year, according to an analysis by a liberal leaning think tank.
The Policy Matters Ohio report shows people making over $550,000 annually will get a tax cut of $5,400.
And researcher Zach Schiller said those making between $40,000 and $65,000 a year will get an average of $49.
“As with income tax cuts in general, but in particular with this one, this is a gift to the most affluent people in Ohio. And it's an expensive gift because altogether these tax cuts are going to cost $1.7 billion.”
And Schiller said the lowering of the tax rate paid by people making over $221,300 in annual income is an extra bonus. The budget would drop that top bracket, and make the marginal tax rate paid by all Ohioans making over $110,651 a year from 4.413% to 3.99%.
Schiller said since people earning under $22,000 a year don’t pay income taxes, so they won’t benefit from the 3% tax cut. The new budget raises that lowest bracket to $25,000 annually.
Senate President Matt Huffman (R-Lima) noted that he thinks this tax cut “is the largest personal income tax cut in the history of Ohio."
The cut comes after the state showed a surprise surplus in revenue - $3 billion more than what was estimated during the pandemic. Much of that comes from federal COVID stimulus money, including funds to governments as well as to individuals in bonus checks.
Gov. Mike DeWine had cautioned lawmakers view this as one-time money. During debate on the budget, Senate Finance Chair Matt Dolan (R-Chagrin Falls) said the federal money is going to infrastructure investments such as water quality and brownfields improvement, demolition of blighted buildings, and $250 million to broadband.
A lawsuit filed by Attorney General Dave Yost sought to challenge the provision in the American Rescue plan that federal COVID dollars could not be used to finance tax cuts by states.
Copyright 2021 The Statehouse News Bureau