New poverty and taxation studies released

By Matt Echelberry

Inquirer Reporter

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.

Posted by Matt Echelberry on Feb 5 2013. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.