COLUMBUS (4-28-22)- State Senator Steve Huffman (R-Tipp City) has introduced a bill to eliminate the Ohio state income tax over ten years. Senate Bill 327 would lower the tax rate of each bracket by ten percent every year over the next decade.
Huffman said –
“The time has come for Ohio to join Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming in eliminating the state income tax. With Ohio’s growing, prosperous economy and robust Rainy Day Fund, this plan is sustainable and builds on the work of previous General Assemblies.”
Over the past decade, the General Assembly has worked to lower the tax burden on Ohioans. In 2011, Ohio had nine tax brackets ranging from 0.587% to 5.925%. As of 2021, Ohio utilizes four brackets with a highest marginal rate of 3.99. However, based on data from the Ohio Department of Taxation, the state has collected similar amounts of personal income tax revenue from 2011 through 2019. The Laffer Curve, an economic theory which illustrates the relationship between tax rates and government tax revenue, may serve as a possible explanation for these results. Given that individuals often adjust their behavior as tax rates change, higher income tax rates decrease the incentive to work compared to lower rates.
Once fully enacted Huffman’s bill would save taxpayers nearly $830 million each year based on data from the Ohio Department of Taxation.