Policy Matters Ohio proposed a tax plan to reinstate state income tax rates on the highest income brackets earned by the wealthiest Ohioans, thereby closing big and unproductive tax breaks. The plan also supports and emboldens Ohio’s Earned Income Tax Credit (EITC) that provides tax assistance to low-income families with children. Policy Matters Ohio worked with the Institute on Taxation and Economic Policy (ITEP) to develop this new revenue strategy and these organizations used the REMI model to evaluate the economic impact of investing increased revenues into public services. The revenue plan involved restoring the 7.5 percent income-tax rate on income over $217,400 approved in 1992, adding a new 8.5 percent rate on income over $500,000, repealing the business income deduction enacted in 2013, making the Ohio EITC refundable, removing a cap on how much of a credit citizens receive, and raising the EITC to 20 percent above the federal amount. The analysis found that enacting these policies and updating the tax structure could generate $2.6 billion in state revenue.
Policy Matters Ohio – Budget: Investing for Growth [full PDF]