January 27, 2017

Policy Matters Ohio: Common Sense Reform for Working Ohio

ITEP Work in Action

Tax modeling from the Institute on Taxation and Economic Policy (ITEP), a national organization with a sophisticated model of the state tax system, shows that Ohio’s current EITC reaches only about 8 percent of the state’s neediest working families and 11 percent of middle income workers. A 20 percent, refundable, non-capped, EITC would extend the credit’s reach to more than a third of the state’s poorest (38 percent) and increase the amount available to all eligible claimants. These changes would mean far fewer working Ohioans would be taxed into poverty. The largest tax cut, an average savings of $620, would go to workers on the cusp of poverty, earning between $21,000 and $39,000 a year. These changes would require an estimated $414 million in state income tax credits, a reasonable expenditure to support labor market participation and local spending and to bring some balance to the $3 billion in cuts Ohio has already enacted over the past dozen years.

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