HB 33: More Cuts for the Wealthy

The budget introduced by the House majority would create more tax cuts for
the wealthy, and temporary tax increases for some middle-class households.

The full benefit of the proposed tax cut is only available to households
with incomes upwards of $98,600, putting them roughly in the top third of
Ohio in terms of income. Because the bill suspends inflation adjustments to
offset the cost of the cuts for the next two years, some middle-income
households will end up paying more during that time.

By itself, the removal of one tax bracket and reduction in rates called for
in the bill would provide permanent tax cuts (starting in 2023) of $238 to
the vast majority of those making more than $100,000, but zero to anyone
with income under $28,000. That permanent tax cut would cost more than $400
million a year over the long term, according to the Legislative Service
Commission. This is not the flat tax of House Bill 1 but the people of Ohio
deserve better than a “less bad” tax plan.

The suspension of inflation indexing for tax brackets and exemptions leads
to tax increases for all tax-paying households. For wealthy households,
these increases do not outweigh the cuts. But, in the case of many
middle-income households, they do, leading to small net tax increases.

According to new estimates provided by the Institute on Taxation and
Economic Policy (ITEP)—a nonprofit with a sophisticated model of state
and local taxation:

* More than half the value of the tax cut (50.7 percent) benefits the wealthiest
20 percent of Ohio households (who make more than $124,000 per year).
* Only about 5.3 percent of the value of the cut will go to the bottom 60 percent of
Ohio households.
* On average, people making between $23,000 and $75,000 per year will see
a small temporary tax increase.