Jan Resseger writes here about Ohio’s passion for cutting taxes, which benefits the wealthiest Ohioans and diminishes public services.
She writes:
As we head toward the November election, Policy Matters Ohio’s Bailey Williams exposes recent history that has been little reported. In The Great Ohio Tax Shift, Williams explores simply and clearly the data showing that Ohio’s new billion dollar private school tuition voucher expansion is not the only factor that has threatened public school funding. For two decades now, legislators have been cutting taxes and reducing investment in public services, including public schools. And Ohio’s legislature has increased the tax burden on Ohio’s poorest citizens and made life easier for our state’s wealthiest citizens.
Even though Ohioans have watched the legislature toss a tax cut into budget after budget instead of funding needed services, the cumulative effects Baily presents in the new report are astounding:
- “Ohio families with the least resources—those making less than $24,000—pay more annual taxes on average today than they did before 2005.
- The average household among the top 1 of Ohio earners, with incomes above $647,000, now contribute over $52,000 per year less than they once did.
- The result is a loss of about $12.8 billion a year in revenue….
- Ohioans of color are significantly more likely to pay a higher share of their incomes in taxes… while white Ohioans are more likely to have benefited….
- 71% of the total value of personal income tax cuts has gone to the richest 20% of households….
- Changes to sales taxes, excise taxes, and business taxes have, on average, increased taxes for the bottom 99% of Ohio’s households.
- Changes to sales taxes, excise taxes, and business taxes have, on average, allowed the richest 1% of Ohio tax filers to pay nearly $600 per year less than they did before 2005.”
Bailey reminds us why we pay taxes and explains what has been sacrificed in Ohio: “Through the state tax system, Ohio can ensure every child gets a world-class education, every community is vibrant and healthy, and every Ohioan, of every race and gender, has a secure economic foundation on which to build our futures. But for a generation, lawmakers have instead used tax policy to create loopholes for the wealthy and influential, and provide special treatment for powerful corporations… The politicians who write state tax policy often justify their decisions with promises that when billionaires’ pockets overflow with profits, the benefits will trickle down to working families. Year after year—now decade after decade—the consequences have been clear: The people with the lowest incomes are paying a little more, the wealthy are paying much less, and Ohio has too few resources to serve its purpose: creating a state where everyone has what they need to live a good life.”
Ohio’s legislature has reduced progressive taxation as it has reduced dependence on income taxes and increased regressive sales, excise and business taxes: “Ohio policymakers have made significant changes to personal income taxes over the two decades, lowering rates and making our tax structure more regressive. Since 2005, almost every biennial budget passed by the Ohio state general assembly has included some form of reduction to the personal income tax, generally through broad tax rate cuts and elimination of top tax brackets. Some changes have benefited low-paid Ohioans: Increasing the threshold at which households begin to pay taxes means households with income below $26,050 don’t pay state income tax…. The creation of a 30% Earned Income Tax Credit has helped low-paid Ohioans.” However, “Other regressive changes in the tax code have completely erased the meager benefits of income tax cuts for the lowest-paid Ohioans. In fact, the lowest-income 20% now pay more on average in taxes than they did before the legislature began its tax cutting spree in 2005. Sales, excise, and business taxes now cost that group more each year on average—more than cancelling out the annual average $122 in income tax cuts this group benefits from….”
Most Ohioans are not prepared to gather and analyze this kind of technical information. Thanks to Bailey Williams and Policy Matters Ohio for this technical analysis. We have spent this year learning about the fiscal implications of the Legislature’s voucher expansion in the current biennial budget; now we are better prepared to understand why, in addition to perpetual voucher expansion, it has been such a struggle to press the Legislature to enact Ohio’s new public school funding formula, the Fair School Funding Plan, to rectify years of inadequate and inequitably distributed public school funding. Legislators have insisted on a slow, three-budget phase-in of the new formula and even now have been unwilling to commit to completing the full launch of the new plan in the budget they will begin negotiating in January. Many of us have realized that the Fair School Funding Plan’s delayed rollout has derived from perennial tax cutting in addition to the enactment of what’s turning out to be an annual billion dollar voucher explosion. Williams’ analysis, released last week, provides information essential to our grasping the complex fiscal realities that will be part of the upcoming state budget debate.
Please open the link to get the full picture of the tax-cutting that has helped the richest Ohioans, hurt the poorest, and undermined public services.