Today, a new study from Policy Matters Ohio showed that the proposed 7% across-the-board income tax contained in the state budget would vastly benefit Ohioans at the very top of the income scale, but would be largely insignificant to everyone else.
In an analysis conducted with the Institute on Taxation and Economic Policy in DC, Policy Matters found that Ohioans in the middle would see a tax cut of just $51 a year compared to $2,717 for those at the top.
And 25% of the overall benefit of the tax cut, estimated to cost $1.5 billion over two years, would go to the richest 1% of Ohioans. The top one-fifth of Ohioans, ranked by income, gobble up over two-thirds of the entire tax cut.
A dollar-a-week tax cut is not significant enough to change consumer demand, a prerequisite for economic growth. And the $2700 that the wealthiest will receive is still not nearly enough to create even one decent job. So, as a “job-creation” strategy, the tax cut is horribly misguided.
Meanwhile, $1.5 billion could be better deployed to stop the bleeding at the local level. 127 school districts would see their funding cut over already-brutal cuts passed in the previous budget, and local governments are still on track to receive $1.4 billion less in this budget than they got before Governor Kasich took office. Without sufficient state funding, schools and local governments will continue to put new local taxes on the ballot, more than wiping out the benefit of the state income tax cut for many.