Ohio flat tax debate not finished

The push to create a flat income tax in Ohio continues, despite the House passing a budget that fell short of the plan.

The Senate continues to hear testimony on its budget version, which could include a flat tax. If so, it must be reconciled with the House’s version. Supporters say the move would make Ohio more economically competitive.

“The Buckeye State is on the cusp of becoming one of the most economically competitive states in the nation, but we need the Ohio Senate to take bold action and implement a flat income tax rate of 2.75% for all Ohioans in this state budget,” Americans for Prosperity-Ohio Executive Director Donovan O’Neil testified before the Senate Finance Committee. “The current version of the budget doesn’t go far enough to enact long-term change and return taxpayer dollars to Ohio families and small businesses. The state took in nearly $6 billion more than expected at the end of the last fiscal year, and our legislature should prioritize returning that money to taxpayers in the form of a permanent income tax reduction.”

In April, AFP-Ohio released a poll showing that 55% of Ohioans support a flat tax.

As previously reported by The Center Square, the House Finance Committee removed a controversial flat tax plan, and instead, the House passed a tax cut expected to impact those earning $90,000 or less the most. Rep. Bill Seitz, R-Cincinnati, said everyone in Ohio making below $92,000 would be paying a flat income tax of 2.75%.

It also exempts baby products from sales and use tax, increases the homestead exemption, creates a $1,000 tax credit for volunteer first responders and creates a low-income housing tax credit program.

“What we are doing in this budget is flattening the tax in Ohio from the bottom up,” said Rep. Bill Seitz, R-Cincinnati. “We are targeting our tax cuts at those who will most benefit from it. I know a completely flat tax is the holy grail for folks on my side of the aisle. We are making progress.”

Greg Lawson, research fellow at The Buckeye Institute, told the Senate committee the nation is in the “midst of a flat-tax revolution,” with nine states moving away from graduated income taxes and five others close to making the change.

“Ohio has a golden opportunity to enact overdue, comprehensive tax reforms and join a flat-tax revolution that will benefit taxpayers and small businesses and make the state more competitive. It should take it,” Lawson testified.

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