Ohio Tax Structure Contributes to Racial Inequity
New research underlines need
to overhaul state tax code
Ohio’s upside-down tax
system takes an especially heavy toll on black and Latino
residents. That’s the finding of new research from the
Institute on Taxation & Economic Policy (ITEP), a national
nonprofit research group with a sophisticated model of the
tax system, that was released last week by Policy Matters
Ohio.
Lower-earning Ohioans pay a
greater share of their income on average in state and local
taxes than high-income Ohioans do. Long-standing structural
barriers in education, housing and at work add up to black
Ohioans and Latinos being more likely to have lower incomes
than white residents. Therefore, they are more likely to pay
higher state and local taxes. Conversely, white people are
more likely to earn higher incomes – and affluent Ohioans
average lower taxes.
ITEP found that 27 percent
of black Ohioans and 40 percent of Latinos are in the
poorest fifth, who earned less than $19,000 in 2018 and
whose total state and local taxes amounted to 12.3 percent
of their income. Only 8 percent of black residents and 7
percent of Latinos are in the top fifth of all earners, who
earned at least $92,000 and average just a 7.7 percent tax
rate. By contrast, 18 percent of whites are in the poorest
fifth and 22 percent are in the richest fifth.
“This underscores the need
for an overhaul of Ohio’s state and local tax system,” said
Zach Schiller, Policy Matters Ohio research director. “We
can raise the revenue we need to fully fund public schools,
public transportation and other important services while
breaking barriers that still remain for many Ohioans of
color. A good place to start is boosting the income tax on
the state’s top earners.” Policy Matters proposed one way to
do that in a June report
(https://t.e2ma.net/click/b7lkug/bvwsuvc/r7cm75b).
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