State Income Tax

Question A: Ohio will experience significant economic growth if lawmakers eliminate its state income tax.

Question B: It will be difficult for Ohio lawmakers to balance the state budget if they eliminate its state income tax.

Question C: Businesses and people will move to Ohio at higher rates if there is no state income tax.

Question A: Ohio will experience significant economic growth if lawmakers eliminate its state income tax.

Economist	Institution	Opinion	Confidence	Comment
Jonathan Andreas	Bluffton University	Agree	3	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. Of course, who knows how the state will recoup the lost revenues as the proposal didn't say anything about that...
David Brasington	University of Cincinnati	Agree	3
Kevin Egan	University of Toledo	Strongly Disagree	10	States have vital roles such as education, police, and infrastructure that must be funded fairly from taxes. Eliminating state income tax is regressive and makes it harder to fund the state. I think it is more likely to reduce state economic growth.
Kenneth Fah	Ohio Dominican University	Uncertain	8
Will Georgic	Ohio Wesleyan University	Strongly Disagree	8	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.
Bob Gitter	Ohio Wesleyan University	Strongly Disagree	10	We cannot eliminate more than 1/3 of our State's General Revenue Fund without dire consequences.
Paul Holmes	Ashland University	Uncertain	5	As always, the devil is in the details. Will taxes rise elsewhere to compensate? Income and corporate taxes are among the least distortionary taxes at our disposal. Replacing them with more distortionary taxes doesn't sound appealing. Cutting state services doesn't seem likely either, it doesn't seem like there's a lot of fat there.
Faria Huq	Lake Erie College	Uncertain	6
Michael Jones	University of Cincinnati	Strongly Agree	10
Bill LaFayette	Regionomics	Disagree	8	The state will be forced to cut public services to the bone. The infrastructure that businesses need and the quality of the workforce will decline.
Trevon Logan	Ohio State University	Disagree	8
Diane Monaco	Economics Professor	Strongly Disagree	9	“State Income Tax Elimination & Economic Growth” Democracies do a more favorable job than autocracies (Ohio’s current state structure) in implementing economic redistribution policies, economic growth & income inequality reductions. Individual income tax systems do affect long-term economic growth. Income tax rate cuts encourage people to work, save, and invest, but if the tax rate cuts are not financed by “immediate” spending cuts they will result in an increased federal budget deficit, which in the long run will decrease national saving & increase interest rates. Tax base increasing measures can also decrease the effect of tax rate cuts on budget deficits, and decrease the effect on labor supply, saving, and investment, thus decreasing the direct effect on economic growth. However, they also reallocate resources across sectors toward their highest-value economic use, resulting in increased efficiency & possibly increasing economic growth. The results suggest that not all tax changes will have the same impact on growth. Reforms that improve incentives, reducing subsidies, circumventing windfall gains, and deficit financing will be more favorable to economic growth, but very likely to create trade-offs between equity & efficiency.
Joe Nowakowski	Muskingum University	Disagree	8
Curtis Reynolds	Kent State University	Strongly Disagree	9	This type of claim has been made for decades but the research and evidence strongly shows that it is not true. If taxes were 90% then it would probably be true, but the reality is that the income tax is just too low to see an increase in economic growth from eliminating it. Overall, the state would lose tax money (as there would not be enough growth) and therefore the state would have to either cut large amounts of spending or raise other types of taxes, none of which will help growth. Just look at the "Kansas experiment" which dramatically cut income taxes and there was no economic growth but disastrous cuts in spending.
Kay Strong	Independent	Strongly Disagree	9	Economic growth is a long-run phenomenon build on quality investment not unlike a stock portfolio.
Iryna Topolyan	University of Cincinnati	Disagree	8
Ejindu Ume	Miami University	Agree	7
Andy Welki	John Carroll University	Uncertain	7	How will the revenue be replaced and if it is not replaced where will spending be reduced?
Rachel Wilson	Wittenberg University	Disagree	8	The revenue shortfall will likely be offset by higher sales taxes, which are highly regressive. Wealthy individuals typically do not spend all their money, so giving them a tax break while increasing taxes on the middle and lower classes could de-stimulate the economy.

Question B: It will be difficult for Ohio lawmakers to balance the state budget if they eliminate its state income tax.

Economist	Institution	Opinion	Confidence	Comment
Jonathan Andreas	Bluffton University	Strongly Agree	8	Eliminating the state income tax will blow a huge hole in the budget! This proposal doesn't say anything about how to fix that. In theory we could raise property, inheritance, and VAT, but any increase in these or other taxes would be politically difficult which is probably why the proposal doesn't discuss the hard choices.
David Brasington	University of Cincinnati	Agree	7
Kevin Egan	University of Toledo	Strongly Agree	10
Kenneth Fah	Ohio Dominican University	Agree	8
Will Georgic	Ohio Wesleyan University	Agree	5	Ohio is not Florida. We will not be able to pass the tax burden on to tourists through sales taxes. I know there is hope that Ohio will be able to tax shale gas activity to make up for this lost revenue, but this seems like an unnecessarily volatile source of revenue for the state.
Bob Gitter	Ohio Wesleyan University	Strongly Agree	10	This cannot be done without gutting essential services.
Paul Holmes	Ashland University	Agree	8	Raise taxes elsewhere or reduce spending. Both are difficult.
Faria Huq	Lake Erie College	Agree	5
Michael Jones	University of Cincinnati	Disagree	5
Bill LaFayette	Regionomics	Strongly Agree	10	The budget must be balanced, but only through draconian budget cuts, including further gutting of the Local Government Fund – shifting the tax burden further to the local level.
Trevon Logan	Ohio State University	Strongly Agree	9
Diane Monaco	Economics Professor	Agree	8	“State Income Tax Elimination & Economic Growth” Democracies do a more favorable job than autocracies (Ohio’s current state structure) in implementing economic redistribution policies, economic growth & income inequality reductions. Individual income tax systems do affect long-term economic growth. Income tax rate cuts encourage people to work, save, and invest, but if the tax rate cuts are not financed by “immediate” spending cuts they will result in an increased federal budget deficit, which in the long run will decrease national saving & increase interest rates. Tax base increasing measures can also decrease the effect of tax rate cuts on budget deficits, and decrease the effect on labor supply, saving, and investment, thus decreasing the direct effect on economic growth. However, they also reallocate resources across sectors toward their highest-value economic use, resulting in increased efficiency & possibly increasing economic growth. The results suggest that not all tax changes will have the same impact on growth. Reforms that improve incentives, reducing subsidies, circumventing windfall gains, and deficit financing will be more favorable to economic growth, but very likely to create trade-offs between equity & efficiency.
Joe Nowakowski	Muskingum University	Strongly Agree	9
Curtis Reynolds	Kent State University	Strongly Agree	8	As stated above, there will not be enough of an increase in economic growth (and maybe no increase at all) to offset the taxes lost. So either other taxes will have to be raised, or large cuts will have to be taken in the state budget. In the "Kansas experiment" in 2012, the state lost hundreds of millions in tax revenues and had to resort to raising sales taxes and massive cuts to education, highways and Medicaid. Note: all of this is regressive, meaning that it harms lower and middle class families much more than wealth families.
Kay Strong	Independent	Agree	9	Subtracting income tax undoubted means adding higher consumption taxes. This would be equivalent to the effect inflation on the paycheck.
Iryna Topolyan	University of Cincinnati	Agree	9
Ejindu Ume	Miami University	Agree	7
Andy Welki	John Carroll University	Agree	7
Rachel Wilson	Wittenberg University	Agree	8	If the legislature doesn't increase other taxes like sales, then it could create a race to the bottom for public services that make a state attractive.

Question C: Businesses and people will move to Ohio at higher rates if there is no state income tax.

Economist	Institution	Opinion	Confidence	Comment
Jonathan Andreas	Bluffton University	Uncertain	9	It all depends on how they balance the budget after they eliminate the income tax. This proposal is like asking if it would be fun to buy a lot of stuff on credit card without considering how the debt will be repaid.
David Brasington	University of Cincinnati	Agree	8	High-income people are sensitive to changes in income taxes, and it would help that Ohio would be the only state in the region without an income tax, but overall mobility would probably be positive but modest
Kevin Egan	University of Toledo	Strongly Agree	10	We already see 50 states with widely different state funding mix of income/sales/property taxes. There is little evidence state funding is an important consideration for economic growth. What matters is the state is laser focused on its role of education, police, infrastructure and efficient laws that encourage growth. How the state is funded is way down the list of importance. How the state is funded is really about fairness.
Kenneth Fah	Ohio Dominican University	Uncertain	8
Will Georgic	Ohio Wesleyan University	Disagree	7	Even for a household that is solidly in the top 10% of the income distribution, this works out to a savings of only about $8,000 per year. This clearly isn't trivial, but I don't think this is salient to a high income household considering moving to Ohio when they are also considering educational and economic opportunities and natural and consumer amenities. It also won't make low income individuals more likely to move to the state as roughly 40% of Ohioans already don't pay state income taxes. This may attract those in the top 1% or make professional athletes more likely to accept a contract from an Ohio based team, but that is about it. When you consider the spending cuts that will be necessary to support this and a likely decrease in the quality of public services, I think it is more likely that this would have a negative effect on immigration into the state. The best case scenario is that Ohio loses fewer residents migrating to neighboring states, but that is not the same as attracting more people to move to Ohio.
Bob Gitter	Ohio Wesleyan University	Disagree	8	When our services decline, people will in all likelihood leave.
Paul Holmes	Ashland University	Disagree	5	Few people really do this, and even fewer would select Ohio. And I don't see this being a big attractor for businesses.
Faria Huq	Lake Erie College	Agree	5
Michael Jones	University of Cincinnati	Agree	5
Bill LaFayette	Regionomics	Uncertain	6	This will be the Tiebout hypothesis at the state level. There will be a sorting of residents. Those who prefer higher levels of public services will move out and those who prefer low taxes over strong public services will move in.
Trevon Logan	Ohio State University	Uncertain	8
Diane Monaco	Economics Professor	Disagree	8	“State Income Tax Elimination & Economic Growth” Democracies do a more favorable job than autocracies (Ohio’s current state structure) in implementing economic redistribution policies, economic growth & income inequality reductions. Individual income tax systems do affect long-term economic growth. Income tax rate cuts encourage people to work, save, and invest, but if the tax rate cuts are not financed by “immediate” spending cuts they will result in an increased federal budget deficit, which in the long run will decrease national saving & increase interest rates. Tax base increasing measures can also decrease the effect of tax rate cuts on budget deficits, and decrease the effect on labor supply, saving, and investment, thus decreasing the direct effect on economic growth. However, they also reallocate resources across sectors toward their highest-value economic use, resulting in increased efficiency & possibly increasing economic growth. The results suggest that not all tax changes will have the same impact on growth. Reforms that improve incentives, reducing subsidies, circumventing windfall gains, and deficit financing will be more favorable to economic growth, but very likely to create trade-offs between equity & efficiency.
Joe Nowakowski	Muskingum University	Uncertain	6
Curtis Reynolds	Kent State University	Strongly Disagree	9	Not enough to matter, if at all. The likely higher sales taxes and lower spending on education and highways will not encourage people to move here. Businesses often already get tax breaks in their own state so there is not really a gain to moving to Ohio (and a large amounts of costs). Also, people (and business owners) care a lot about local amenities. I love living in Ohio, but not everyone likes the amenities here. Colorado has way more sun and mountains, Florida has sun and beaches, etc. Note, again, that there is no evidence that people or businesses moved to Kansas during their experiment, even thought it was claimed that they would.
Kay Strong	Independent	Strongly Disagree	9	The quality of the workforce matters. Employers that would add real value will need skilled workers which Ohio is not able to provide due to is lack of focus on education.
Iryna Topolyan	University of Cincinnati	Disagree	6
Ejindu Ume	Miami University	Agree	6
Andy Welki	John Carroll University	Uncertain	7	If services are cut as a result of the reduced tax revenue, it is unclear whether or not that is a net positive or a net negative.
Rachel Wilson	Wittenberg University	Disagree	8	Taxes are one of many reasons people move to a state. Education, healthcare, weather etc. all matter.