DALLAS, Dec. 9, 2015 /PRNewswire-USNewswire/ -- Ohio's income tax cuts could save the state from losing billions in income previously lost to residents moving to other states, according to a new report from National Center for Policy Analysis Senior Fellow Pam Villarreal.
"In July 2013, Gov. John Kasich (R) and the General Assembly passed a significant, $2.7 billion tax cut package that included a reduction in state income tax rates, phased in over three years," says Villarreal. "From 2013 to 2014 tax rates were reduced 9 percent, thus lowering the bottom rate to 0.534 percent and the top rate to 5.392 percent."
With these tax cuts, how did Ohio compare to neighboring states in 2014? Consider a 40-year old married homeowner couple earning $100,000 a year:
- Pennsylvania: The couple would have gained only an additional $81 in discretionary income moving from Pennsylvania to Ohio, for a lifetime wealth gain of $6,723.
- Kentucky: The couple would have lost $917 in discretionary income annually by moving from Kentucky to Ohio, for a lifetime wealth loss of $75,840.
- West Virginia: The couple would have lost $879 in discretionary income annually moving to Ohio, for a lifetime wealth loss of $72,666.
However, those who are renting fare much better in Ohio. For instance:
- A 30-year old single renter earning $75,000 a year would have gained $861 in discretionary income, for a lifetime wealth gain of $87,373 moving from Kentucky to Ohio
- A 30-year old single renter earning $75,000 a year would gain $1,169 in discretionary income moving from West Virginia to Ohio, for a gain in lifetime wealth of $118,694.
"Ohio's tax reform has made the state more competitive with its immediate neighbors, particularly for renting households," says Pam Villarreal. "But for homeowners, Ohio's higher property tax rates make these households worse off compared to neighboring states."
An Analysis of Ohio's Income Tax Changes from 2013 to 2014: http://www.ncpa.org/pub/an-analysis-of-ohio-s-income-tax-changes-from-2013-to-2014
The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. We bring together the best and brightest minds to tackle the country's most difficult public policy problems — in health care, taxes, retirement, education, energy and the environment. Visit our website today for more information.
SOURCE National Center for Policy Analysis