Low Income Tax Cuts

Question A: Ohio GSP is significantly higher as a result of the creation and expansion of the 0% income tax bracket for the lowest earners. 

Question B: Real median wages are significantly higher as a result of the creation and expansion of the 0% income tax bracket for the lowest earners. 

Question C: State tax revenues are significantly lower as a result of the creation and expansion of the 0% income tax bracket for the lowest earners. 

Question A: Ohio GSP is significantly higher as a result of the creation and expansion of the 0% income tax bracket for the lowest earners. 

Economist	Institution	Opinion	Confidence	Comment
Jonathan Andreas	Bluffton University	Agree	5	Because most other state taxes are somewhat regressive w.r.t. income, a progressive income tax just makes the overall tax burden fairly flat and there are theoretical reasons why somewhat progressive taxation should be more efficient for economic growth as long as wealthier people actually pay it rather than spending money on tax lawyers to evade it.
Ron Cheung	Oberlin College	Agree	8
Kevin Egan	University of Toledo	Disagree	6	This tax break is only a few hundred dollars. I think this tax break is fair but it is too small to ask questions about the impact on the economy.
Paul Holmes	Ashland University	Strongly Disagree	9	Given Ohio's (close to) balanced budget rule, the effect of decreasing taxes shouldn't be considered in isolation from the corresponding decrease in spending. Overall, I'd expect the effect to be minimal. Further, it seems unlikely that a reduction in taxes of a couple of percentage points would induce significant changes in labor supply. So overall I doubt this change had much effect on GSP.
Michael Jones	University of Cincinnati	Uncertain	5
Charles Kroncke	Mount Saint Joseph University	Uncertain	5	GDP?
Trevon Logan	Ohio State University	Uncertain	8
Diane Monaco	Economics Professor	Strongly Disagree	8	In 2017, the Ohio General Assembly eliminated state income tax rates for taxpayers earning less than $10,650, and then legislators continued to lower tax rates for taxpayers earning less than $26,000 where there were still no state income taxes! 41 states have an individual income tax rate on wages and income. State income tax rates range from 1.4% -11% and are in general 40% of overall state tax collections. What is even more important is that state income tax brackets are generally comparable among states, although income tax brackets for higher income earners play a much greater role. Overall state income tax rates tend to be relatively more progressive than the Federal (IRS) income tax rates that are more likely to offer compromises on settling tax debt for less debt than the full amount. However, state level income tax collectors quite often and unexpectedly push struggling income taxpayers even deeper into debt hardship.
Joe Nowakowski	Muskingum University	Agree	8
Curtis Reynolds	Kent State University	Disagree	8
Kay Strong	Independent	Uncertain	8	"Significant" is a rather loaded word.
Ejindu Ume	Miami University	Uncertain	7
Kathryn Wilson	Kent State University	Disagree	8	I do not think that the tax change will have much of an effect on the number of low-income individuals who work or the number of hours they work, so I don't expect to see much of a change in GSP.

Question B: Real median wages are significantly higher as a result of the creation and expansion of the 0% income tax bracket for the lowest earners. 

Economist	Institution	Opinion	Confidence	Comment
Jonathan Andreas	Bluffton University	Strongly Agree	9	I'll interpret this question as being concerned with AFTER-TAX income. Whereas some economists dispute the efficiency of progressive taxation, it is hard to dispute that it decreases inequality and there is no evidence that such a modestly progressive system reduces efficiency nearly enough to outweigh the inequality-lowering effect. The median-income worker clearly gets a tax cut due to this system.
Ron Cheung	Oberlin College	Agree	7
Kevin Egan	University of Toledo	Uncertain	5	Obviously the lowest earners have slightly higher real wages due to the small tax break but the median income person is still paying a small amount of state income tax (2.765% rate). Maybe overall the state economic activity is slightly expanded due to giving the poorest Ohioans more purchasing power, but I expect the effect to be small.
Paul Holmes	Ashland University	Strongly Disagree	9	The median Ohioan is not in the 0% bracket, so it's hard to imagine how creating/expanding the 0% bracket would affect median wages.
Michael Jones	University of Cincinnati	Agree	6
Charles Kroncke	Mount Saint Joseph University	Uncertain	7
Trevon Logan	Ohio State University	Strongly Disagree	10	The tax has no bearing on median wages as properly defined.
Diane Monaco	Economics Professor	Strongly Disagree	8	In 2017, the Ohio General Assembly eliminated state income tax rates for taxpayers earning less than $10,650, and then legislators continued to lower tax rates for taxpayers earning less than $26,000 where there were still no state income taxes! 41 states have an individual income tax rate on wages and income. State income tax rates range from 1.4% -11% and are in general 40% of overall state tax collections. What is even more important is that state income tax brackets are generally comparable among states, although income tax brackets for higher income earners play a much greater role. Overall state income tax rates tend to be relatively more progressive than the Federal (IRS) income tax rates that are more likely to offer compromises on settling tax debt for less debt than the full amount. However, state level income tax collectors quite often and unexpectedly push struggling income taxpayers even deeper into debt hardship.
Joe Nowakowski	Muskingum University	Uncertain	10
Curtis Reynolds	Kent State University	Disagree	8
Kay Strong	Independent	Uncertain	8
Ejindu Ume	Miami University	Uncertain	6
Kathryn Wilson	Kent State University	Disagree	8	This will affect the amount of disposable income available to households with income less than $25,000, and thus would affect average disposable income. However, given the relatively small number of individuals affected (less than 50% of Ohioans), the median will not change.

Question C: State tax revenues are significantly lower as a result of the creation and expansion of the 0% income tax bracket for the lowest earners. 

Economist	Institution	Opinion	Confidence	Comment
Jonathan Andreas	Bluffton University	Agree	1	This question may have left out some implied context making it difficult to answer. A tax cut almost always reduces tax revenues, and by itself, this will definitely reduce revenues. But I think you might have been wanting to ask about the overall tax package which modestly increased taxes on higher-income earners making the overall effect of the tax changes fairly revenue neutral.
Ron Cheung	Oberlin College	Disagree	7
Kevin Egan	University of Toledo	Disagree	7	I expect state tax revenues to be slightly lower, which could be offset by other more efficient taxes, such as corrective taxes on gasoline or alcohol that could then fund efficient state programs such as subsidizing high quality pre-k education programs for children.
Paul Holmes	Ashland University	Strongly Agree	9	Imagining we're on the right hand side of the Laffer curve is... a real laugher.
Michael Jones	University of Cincinnati	Disagree	8
Charles Kroncke	Mount Saint Joseph University	Disagree	5
Trevon Logan	Ohio State University	Disagree	9	Given high MPC and consumption taxes, it is not clear that state tax revenue suffers.
Diane Monaco	Economics Professor	Disagree	7	In 2017, the Ohio General Assembly eliminated state income tax rates for taxpayers earning less than $10,650, and then legislators continued to lower tax rates for taxpayers earning less than $26,000 where there were still no state income taxes! 41 states have an individual income tax rate on wages and income. State income tax rates range from 1.4% -11% and are in general 40% of overall state tax collections. What is even more important is that state income tax brackets are generally comparable among states, although income tax brackets for higher income earners play a much greater role. Overall state income tax rates tend to be relatively more progressive than the Federal (IRS) income tax rates that are more likely to offer compromises on settling tax debt for less debt than the full amount. However, state level income tax collectors quite often and unexpectedly push struggling income taxpayers even deeper into debt hardship.
Joe Nowakowski	Muskingum University	Disagree	6
Curtis Reynolds	Kent State University	Disagree	8	The key word is "significantly." Tax revenues may be lower because of this, but they are also lower because of tax cuts to other parts of the income distribution.
Kay Strong	Independent	Disagree	9	Low income taxpayers contribute minimally to the tax base
Ejindu Ume	Miami University	Uncertain	6
Kathryn Wilson	Kent State University	Disagree	8	There will be significantly lower state tax revenues because of the changes, but this is driven by the reduction in tax rates across all income levels and the elimination of the top tax rate. The reduction in income from the expansion of the 0% income tax bracket for lowest earners will be small in absolute terms and relative to the overall reduction in tax revenue.