Ohio’s wealthy would see important tax cuts beneath the brand new state funds

COLUMBUS, Ohio – While Republican Legislators advocated a 3% nationwide income tax cut in the new state budget, the wealthiest in Ohio would actually see cuts far bigger than the law allows.

This is because the state budget, which the legislature passed almost unanimously on Monday evening, removes an entire income tax class from the state’s tax code. And it lowers the tax rate for the new richest class to 3.99%.

If Governor Mike DeWine signs the amendments to the law, it would mean that the wealthiest Ohioans would get a 16.8% cut for that portion of their taxable income above $ 221,300 and a 9.6% tax cut on that portion of their taxable income of $ 115,000 $ 221,300 per year would be received. Tax rates for tax brackets under $ 115,000 would be reduced by 3%.

In other words, state lawmakers are trying to give the richest 1% of Ohioans an average annual income tax cut of $ 5,400, according to a study by the left-wing Institute for Taxes and Economic Policy. For comparison, Ohioans who earn between $ 42,000 and $ 65,000 a year would save an average of $ 49 a year in taxes, according to the study.

“Don’t make it sound like, ‘Oh, everyone has a 3% tax cut,'” Rep. Dan Troy, a Willowick Democrat, said in an interview. “Some people who make a lot of money got a hell of a lot more than a 3% tax cut.”

When asked why the maximum tax rate was lowered, Senate Finance Committee chairman Matt Dolan told reporters Monday that lawmakers want Ohio to be more competitive.

“Only Indiana is now lower than we are in our surrounding states,” said Dolan, a Republican from Chagrin Falls. “So it’s about giving money back to individuals. It’s also about making our country attractive for development. “

Dolan later added, “We’re trying to get the accordion effect and bring the low and high (tax rates) very close together to make Ohio a better place to work.”

Senate GOP spokesman John Fortney responded in an email when asked why the rich would get bigger tax cuts: “We just believe your money comes first, not government money.”

Fortney added, “It is unfortunate that a bipartisan budget passed by 32 votes out of 33 (Senate) votes continues to be the target of the same old hollow class war attacks from the left.”

A House Republican spokesman did not immediately respond to a call Tuesday for comment.

The budget would also provide tax aid to poorer Ohioans by increasing the minimum Ohioans must earn before they owe state income taxes from $ 22,150 to $ 25,000. That would mean 125,000 additional Ohioans would no longer have to pay income tax, Fortney said, citing data from the Ohio Department of Taxation.

Currently, an Ohioan with a taxable income of $ 25,000 per year pays approximately $ 400 per year in state income tax.

But Troy didn’t seem impressed with the move compared to the tax cuts offered to wealthier Ohioans.

“It didn’t seem like a fair compromise to me,” he said.

Greg Lawson, a research fellow at the conservative Buckeye Institute, said the Republican legislature’s move on that budget was just the latest in a series of attempts to flatten Ohio’s income tax rate and reduce the number of state income tax brackets.

That budget, Lawson said, would result in Ohio having only four tax brackets – up from nine tax brackets a decade ago.

“This is a huge simplification of the tax law they were working on,” Lawson said. He added that he believed this was correct and that it was a “philosophical opinion” as to whether or not Ohio should have a progressive income tax rate.

When asked if the tax change in this year’s draft budget was an attempt to introduce a flat tax in Ohio, Dolan said, “I think there are a number in the (Senate GOP) faction trying to achieve that goal.”