Analysis of Proposed Capital Gains Tax Cut
reportThe Ohio legislature is considering a proposal to scrap the current Ohio rule that taxes capital gains (profits from selling stock, investment real estate, etc.) at the same rates as other income. The plan would reduce the maximum Ohio tax rate on capital gains as follows:
- In 2007, from the currently scheduled 6.555 percent to 5 percent.
- In 2008, from the currently scheduled 6.24 percent to 4 percent.
- In 2009 and thereafter, from the currently scheduled 5.925 percent to 3 percent.
Taxpayers whose top marginal income tax rate is less than these proposed maximum capital gains rates would be unaffected by the proposal.
An analysis of the proposed Ohio capital gains tax cut by the Institute on Taxation and Economic Policy finds that:
- Three quarters of the proposed tax cuts in the first three years would go to the wealthiest one percent of Ohioans.
- The plan would likely cost the state thousands of jobs, because a large share of the tax cuts would be diverted out of state, including almost a fifth that wouldbe sent directly to the federal government in higher federal income taxes.