In a survey released this morning by Scioto Analysis, 11 of 19 economists disagreed that Ohio will experience significant economic growth if lawmakers eliminate its state income tax, while four agreed and four were uncertain. There is currently legislation under consideration that would eliminate the state income tax in Ohio, and supporters claim that eliminating the tax will strengthen Ohio’s economy and encourage businesses and workers to move to the state.
Will Georgic from Ohio Wesleyan wrote “I think that Ohio is more like Kansas than its lawmakers want to admit (and certainly more like Kansas than we are like Florida, Washington, Nevada, or Texas). This experiment did not go well for Kansas.” In contrast, Jonathan Andreas from Bluffton University wrote “Although the Federal income tax is a pretty efficient and very progressive way to generate revenues, state income taxes like Ohio's are relatively regressive and Ohio's is particularly burdensome relative to the smaller amount of revenue given that Ohio has three income tax authorities: state, school district, and local! That is an absurd amount of bureaucracy for a much smaller amount of tax revenues than the Feds get. I'd prefer that we just pay one income tax to the Feds and have states generate revenues primarily through higher land taxes which are more efficient and about as progressive.”
Whether or not removing Ohio’s income tax leads to economic growth, it will present a challenge to lawmakers who have a mandate to keep the state’s budget balanced. 18 of 19 economists surveyed agreed that it will be difficult for lawmakers to keep a balanced budget if they eliminate the income tax.
As Paul Holmes from Ashland University wrote “Raise taxes elsewhere or reduce spending. Both are difficult.” Similarly, Bob GItter from Ohio Wesleyan wrote “We cannot eliminate more than 1/3 of our State's General Revenue Fund without dire consequences.”
The Ohio Economic Experts Panel is a panel of over 40 Ohio Economists from over 30 Ohio higher educational institutions conducted by Scioto Analysis. The goal of the Ohio Economic Experts Panel is to promote better policy outcomes by providing policymakers, policy influencers, and the public with the informed opinions of Ohio’s leading economists. Individual responses to all surveys can be found here.