Each plan, if enacted in 2024, would shrink income tax year-by-year until it’s down to zero by 2030. Each plan would also whittle down the tax rate for the wealthiest Ohioans earning over $100,000 a year more quickly than it would reduce the rate for Ohioans earning between $26,001 to $100,000. The plans differ in their rate of reduction.
The lawmakers offered no concrete solutions to how the state would make up for all the lost revenue. They intend to hold Statehouse hearings on the legislation, along with “dozens” of town halls on the topic, to get a sense of what Ohioans would like to see.
But underlying their plan is the belief that levying fewer taxes increases the tax base. In this instance, eliminating the income tax could be seen as a way to spur economic activity or entice more businesses to move to Ohio.
“My belief is that the benefits of this program will pay for itself,” said Lang, a business-friendly lawmaker who has long advocated to eliminate the income tax.
“We’re introducing this plan today in a similar way as JFK’s moonshot. (We’re saying) ‘Here’s our goal, here’s the endpoints. How do we get there?’” Mathews said.
It’s currently unclear what kind of support the initiative would have at the Statehouse. Huffman noted that he’s had positive talks with Senate President Matt Huffman, R-Lima, and Mathews added that House leadership has generally been in favor of lowering Ohioans’ taxes; but a variety of similar proposals in years past have not seen success.
Concern and support
Ben Stein, communications director with the left-leaning thinktank Policy Matters Ohio, said his organization’s position is that such a move would be “catastrophic” and would “gut the state.” He characterized the goal as a massive tax cut for the wealthy.
Specifically, Stein relayed his organization’s concern that the state would either have to raise other taxes, like sales tax, or drastically cut spending, in order to make up for the state’s loss in tax revenue.
He added that income tax is the state’s only “progressive” tax, i.e. a tax that scales up with an individual’s income.
“By getting rid of the only progressive tax in the state, they’re making our system less fair, and it’s already a very unfair system,” Stein said.
Greg Lawson, a researcher with right-leaning Ohio thinktank The Buckeye Institute, told this news organization that Ohio needs to take further action in this space in order to compete with a handful of states across the country that have already eliminated income tax.
“If we just sit on the sidelines and stay where we are today, you’re going to lose — even if you didn’t cut it — because other people are cutting it, which means that your tax has been functionally become higher relative to other states,” Lawson said.
He noted that his organization would generally be in support of getting to a zero income tax rate, but noted that some states have made unwise decisions in their quest to get there.
“If you’re going to do tax reform, you also have to do, frankly, some degree of spending reform. You’re going to have to kind of get a grip on what you’re spending and we have a lot of big costs in Ohio,” Lawson said, listing public education, Medicaid and prisons. “You’ve got to look at what you’re spending and make adjustments there.”