An Ohio-based think tank said changes to the tax system in the state could bring home more money for families and represent better budgetary priorities.
The analysis came as Gov. Mike DeWine is set to give his “State of the State” on Tuesday, followed by a formal introduction of his budget priorities to the state’s General Assembly.
With the American Rescue Plan’s one-time investments coming to an end and costs of food and energy up nationally, plus a state legislature that seems poised to attempt more anti-abortion measures and that has already proposed an overhaul of the state education system, families may face challenges paying for things like rent and utilities as the legislature deals with other priorities.
“Compared to the nation, children in our state are more likely to go without food and less likely to live in financially secure households,” researchers with Policy Matters Ohio said in a recent policy breakdown.
The analysis also points to a lack of affordable child care leading to education proficiency and kindergarten readiness issues among other challenges the state is facing.
Pointing to last year’s State of the State speech by DeWine, in which he said “there is simply no better place to raise a family than Ohio,” Policy Matters compared the state to others in the country on categories such as health and wellness, learning and growth, connection and community, and dignity and opportunity.
Ohio ranked above other states in commute via public transit (22nd in the nation), broadband access (23rd) and library resources per capita (3rd), along with median wage (24th).
But the state fell below most other states in the areas of child food security (35th), infant mortality rate (42nd), opioid overdoses (46th), k-12 funding equity (47th) and child economic security (37th).
With the current tax system serving the most wealthy, “the same old strategy isn’t working,” the researchers found. Using data from the Institute on Taxation and Economic Policy estimating 2022 incomes, Policy Matters found that the richest 1% of Ohioans receive more than $50,000 annually in tax cuts on average.
“Meanwhile, Ohio households making less than $65,000 — a full 60% of Ohio taxpayers — are paying more on average in taxes today compared to what they did in 2005,” the analysis stated.
As they pay more in taxes, 4 in 10 of the states most common jobs pay “near-poverty” wages” and minority families suffer inequity on top of the instability of other families, with the Ohio Department of Health concluding that the Black infants die 2.5 times as often as white children.
“We all benefit from strong, inclusive public schools, a health care system that provides care for all of us and public institutions and programs that connect people to information and resources to live a decent life,” Policy Matters stated.
The policy organization criticized the inclusion of crisis pregnancy centers in the last state budget, wherein $6 million went to the Ohio Parenting and Pregnancy Program, funding those centers, which are typically led by religious organizations and aren’t allowed to provide information on abortions.
“Rather than using public funds to undermine people’s freedom to make their own health decisions, state policymakers should dedicate these funds to programs that give people the full range of medical options to deal with and prevent pregnancy,” researchers stated.
In the newest budget, Ohio could establish a family tax credit, putting the Women, Infants and Children program online and expanding the Supplemental Nutrition Assistance Program would help impoverished families with better health outcomes and more support, according to recommendations from the think tank.
A 10% refundable Earned Income Tax Credit option “would put more money back in the pockets of workers who are paid low wages,” the analysis recommended, along with increased qualification for unemployment compensation.
The personal income tax could be directly targeted by lawmakers in the next budget, as Policy Matters Ohio recommended restoring tax rates to previous levels of 7.5% for those making more than $250,000 and a new rate of 8.99% for those making more than $1 million.
Researchers called the business income deduction, also called the “LLC loophole,” one of the “biggest drains on Ohio’s collective resources,” as it creates a provision in state tax law to allow individuals who have ownership of a limited liability company not to pay the first $250,000 in income taxes.
“We can harness our collective resources to lay the foundation of prosperity and opportunity for all our residents, no matter their race, income, gender or ability,” the analysis concluded.
DeWine is set to give his state of the state speech at noon Tuesday.
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