Yesterday, Ohio Gov. John Kasich unveiled his latest two-year budget proposal, featuring a large cut in the state income tax, paid for with increased taxes on everyday purchases, on business activity and on oil and gas extraction.
This is not the first time Kasich has proposed cutting the state income tax — the state’s most progressive tax. The tax is designed so those at the top income level pay the highest rate. The state’s estate tax on inherited wealth was eliminated completely in the Governor’s first budget.
To pay for these tax cuts that primarily benefit the wealthy, the Governor’s budget proposes raising the state’s regressive sales tax and expanding it to more services — including parking and cable TV subscriptions.
People with low-incomes spend much of their income on things that are taxed. As a result, they pay a much larger share of their income on taxes in states with regressive tax systems that rely heavily on sales taxes to fund state spending. According to the Institute on Taxation & Economic Policy, the poorest 20% of Ohioans pay nearly 12 percent of their income on state and local taxes, compared to just 5.5% paid by the top 1%.
We crunched the numbers, and here’s how dramatic the shift has been in just six years.
Combined, the state’s income and estate taxes have declined from 45% of state general revenue to just 28%. At the same time, sales taxes have increased from 43% to 53% and now picks up the largest share of the cost of state government.
|Income & Estate Taxes||44.7%||45.7%||40.3%||39.2%||29.2%||27.6%|