One of the earliest bills reintroduced in the Ohio Senate this January from the last legislative session would flatten the income tax rate, most immediately affecting Ohioans who make more than six figures.
Senate Bill 3, introduced by Sens. George Lang (R-West Chester) and Steve Huffman (R-Tipp City), would phase down the current two-bracket system, transitioning to a flat rate for everybody at 2.75%. That process would take two taxable years, bringing those making $102,400 or more annually from 3.5% to 3.125% one year, then to 2.75% the next.
“By the way, (Democratic former Presidents) John Kennedy and Bill Clinton both significantly lowered taxes and our country flourished as a result,” Lang said during a Wednesday committee hearing. “By enacting a flat tax, we will encourage economic growth, thereby increasing revenues.”
The bill doesn’t adjust the income tax rate for Ohioans who make anywhere between $26,700 and $102,400, since they already fall within that 2.75% bracket.
Sen. Beth Liston (D-Dublin) said Wednesday she takes issue with that, because according to U.S. Census Bureau data, about four-fifths of Ohioans were making under that higher range.
“Can you talk a little bit about why you think those 80% should be footing the bill for that 20%, when we look at our state budget?” Liston asked Lang during committee.
Lang and Huffman’s intent with SB 3, Lang said, is not to raise anyone’s taxes. Ideally, Ohio’s highest earners would use that extra take-home to reinvest in the state, he said.
By reducing budgetary reliance on the income tax and shifting that burden toward other taxes—like the state sales tax—Lang said Ohio could be in a position to eventually eliminate the income tax altogether. That’s a priority for some in the GOP caucus, but Gov. Mike DeWine has thrown cold water on the idea before, saying in December he didn’t believe it would be feasible.
Less than a fifth of states levy no income tax.
Four of Ohio’s five neighboring states levy a flat rate on residents’ income, according to the Tax Foundation, though their rates are anywhere from a percentage point or more higher than 2.75%.
SB 3 is being heard in the Senate Ways and Means committee.
