The time has come for Ohio to join Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming in eliminating the state personal income tax through Senate Bill 327. Over the past decade, the General Assembly has worked to lower the tax burden faced by hard working Ohioans. In 2011, Ohio had nine tax brackets ranging from 0.587% to 5.925%. As of 2021, Ohio utilized four brackets with a highest marginal rate of 3.99%.
According to data from the Ohio Department of Taxation, the state has collected similar amounts of personal income tax revenue from 2011 through 2019. The Laffer Curve, an economic theory which illustrates the relationship between tax rates and government tax revenue, may serve as a possible explanation for these results. Given that individuals often adjust their behavior as tax rates change, higher income tax rates decrease the incentive to work compared to lower rates. While previous General Assemblies should be commended for their attempts to lower Ohioans tax burdens, I believe it is time to create a long term plan to completely eliminate Ohio’s personal income tax.