Policy Matters Ohio: Ohio Nees a Strong Income Tax
ITEP Work in ActionOhio’s income tax is the only major tax that is based on ability to pay. This principle was embraced by the founders of our democracy, such as Thomas Jefferson, as well as by the intellectual father of capitalism, Adam Smith. As your taxable income goes up, you pay a higher rate; for instance, income between $20,450 and $40,850 is taxed at 3.521 percent, while income between $40,850 and $81,650 is taxed at 4.109 percent. Those with income below $10,000 receive a credit that wipes out their tax liability; the top rate, 5.925 percent, is applied to income over $204,200.[2] Other major taxes, such as sales and property taxes, take a bigger bite out of poor and middle-class Ohioans’ income than they do of those now making $340,000 or more a year, the top 1 percent of Ohio taxpayers. Ohio, along with 41 other states and the District of Columbia, relies on a state income tax to meet vital needs. This brief describes reasons why Ohio needs a strong income tax.[1]