New poverty and taxation studies released
By Matt Echelberry
According to two recent, independent studies, Ohio does not fare well with taxation policy or giving aid to impoverished residents. A study by the Institute on Taxation and Economic Policy called “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States” examines each state’s taxation system (www.policymattersohio.org/income-tax-jan2013).
From Policy Matters Ohio, which released the study in Ohio: “The study’s main finding is that nearly every state and local tax system takes a much greater share of income from middle– and low-income families than from the wealthy.”
The ten states with the highest taxes on the poor are Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Pennsylvania, Rhode Island, Texas, and Washington. Ohio tied for 11th with South Dakota.
A key finding in regards to Ohio were that low– and middle-income Ohioans pay a larger share of their income in state and local taxes than rich Ohioans do. The top 1 percent of non-elderly Ohio families who earned at least $324,000 in 2010, on average pay 8.1 percent of their income in state and local income, property, sales and excise taxes. Comparatively, the lowest fifth, who make less than $17,000, pay an average of 11.6 percent (www.policymattersohio.org/wp-content/uploads/2013/01/WhoPays-OhioFactSheet.pdf).
One positive aspect the study points out is that Ohio uses a graduated rate for its personal income tax collection. According to the study, this lessens the disparity between the haves and the have nots.
The second study, conducted by the Corporation for Enterprise Development, is called the Assets & Opportunity Scorecard (www.scorecard.assetsandopportunity.org/2013/state/oh). The Scorecard explores how well residents are faring in the 50 states and the District of Columbia and assesses state policies that are helping residents build and protect assets across five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education. The Scorecard also separately assesses states on the strength of their policies to expand economic opportunity.
Ohio was ranked at 36, with an income poverty rate at 15.4 percent, compared to the 14.6 percent national average. The scorecard also corroborates the ITEP study, stating that the poorest 20 percent of Ohio families pay 1.8 times more of their income in taxes than the top 1 percent.
According to the CFED, ways the state can improve these trends are: Promote financial security, create stronger customer protection laws and promote savings opportunities.
The Institute on Taxation and Economic Policy (ITEP) is a 501©(3) nonprofit, nonpartisan research organization that works on federal, state, and local tax policy issues. www.itep.org.
Policy Matters Ohio is a nonprofit, nonpartisan state policy research institute with offices in Cleveland and Columbus.
CFED (Corporation for Enterprise Development) expands economic opportunity by helping Americans start and grow businesses, go to college, own a home, and save for their children’s and own economic futures. We identify promising ideas, test and refine them in communities to find out what works, craft policies and products to help good ideas reach scale, and develop partnerships to promote lasting change. We bring together community practice, public policy and private markets in new and effective ways to achieve greater economic impact.