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Government and Politics

Liberal Ohio think tank says tax breaks have benefited the rich and corporate
Policy Matters says the poor's taxes have actually gone up since 2005

Jo Ingles
Policy Matters Ohio says that Ohio's current tax policies benefit the rich over the poor.
Courtesy of Policy Matters Ohio
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Ohio lawmakers began income tax cuts back in 2005 and they have continued to cut those same taxes even in recent years. But sales taxes have increased.

A liberal leaning think tank has taken a look at how the tax shifts since 2005 have affected Ohioans. Zach Schiller of Policy Matters explains the tax changes have had a disproportionately positive effect on wealthier Ohioans.


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“When you look at the major tax changes over that time period, the top 1 percent of people, the most affluent Ohioans, got a tax cut that amounts to about $20,000 a year while the people on the bottom three-fifths, taken as a group, saw an increase," Schiller says.

Schiller says people on the other side would say the people on the bottom did not see an increase because they've gotten tax credits and other incentives during that time. But he says when Policy Matters looked at the data, it did not add up.

Who benefitted?
"[Our analysis] includes for example, the tax credit that was passed under (Gov.) Bob Taft in 2005 as well as the more recent institution of an earned income tax credit and what you find is that while those certainly did reduce taxes for lower income Ohioans, the fact is that low income people pay most of their state and local taxes in state, excise and property taxes," Schiller says.

"We have a progressive income tax, so when you cut the income tax across the board, most of it goes to affluent people, and it doesn’t do a whole lot for people who don’t make much. In fact, there is a modest cut in income taxes even for the lowest income Ohioans but it is more than overwhelmed by the other tax changes like the increase in the sales tax.”

The elimination of Ohio’s corporate franchise tax mostly helped the rich, Schiller says.

"The corporate franchise tax was the name for [Ohio's] corporate income tax," Schiller says. "We are now one of six states in the country that does not have a corporate income tax. The corporate income tax was paid more by affluent people so when you cut it, you are helping to reduce their taxes.

"But in the end, what we did is cut taxes pretty significantly. All of these things together wound up being a $3 billion a year tax cut and people on the bottom end, as a group, did not do so well."

So did Ohio get more jobs?
The theory behind cutting these taxes was that it would entice more businesses to come to Ohio and that would create more jobs. Schiller says that is not happening.

"Between June 2005 and just last month, Ohio lost a total of 126,000 jobs or 2.3 percent of the total," Schiller says. "During that time period, the country as a whole gained more than 5 million jobs or 3.8 percent. So here, over that time period, Ohio actually saw a loss and over the most recent year, we have also seen comparatively small job growth in Ohio. So I don’t think you can make a convincing case that the tax cuts have allowed Ohio to out perform the country.”

Most Ohio lawmakers who support the tax reform say they realize Ohio is not out of the woods yet but they believe those policies need more time to work. 

In a recent statement, Gov. Kasich’s spokeswoman, Connie Wehrkamp, said the jobs-friendly policies championed by Kasich are working, evidenced by the fact that Ohioans have created 250,000 private sector jobs since he took office after losing 350,000 under the previous administration.

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