Wealthiest Ohioans hit hardest by tax-cut delay

COLUMBUS (AP) — The wealthiest Ohioans would account for most of the money Gov. Ted Strickland hopes to raise by freezing a planned income tax cut, a newspaper reported Sunday.

A review of state Department of Taxation records by The Dispatch finds that Ohioans earning more than $200,000 a year would provide 40 percent of the revenue.

The analysis shows that Ohioans earning between $100,000 and $200,000 annually would contribute another 20 percent of the $844 million Strickland hopes to raise.

The majority of Ohio taxpayers, those earning between $20,000 and $80,000 a year, would lose an average of $44 they would have saved if the freeze is approved.

Strickland has proposed freezing income tax cuts for two years to fund education in the wake of a court decision that halted his plan to put lottery slot machines at racetracks.

Strickland had been counting on about $850 million from the state’s plan to place slot machines at the state’s seven horse racetracks. But the Ohio Supreme Court put that plan on hold Sept. 21 when it ruled voters could have their say on the idea a year from November.

Should lawmakers approve Strickland’s new plan to delay the tax cuts, Ohioans would not feel the impact until they file state tax returns for the current year. Current withholding amounts would remain the same.

Many business groups support the plan, as long as the tax-cut delay is temporary. Others worry the delay will make Ohio less competitive compared to other states.

Thomas Zaino, a former state tax commissioner, said it might make more sense to allow the income tax reduction to proceed and raise the sales tax instead.

Other states have much lower income tax rates already, he said.

“What message does this send to folks who have the ability to leave the state for a lower tax rate,” Zaino said.

But some advocacy groups say an increase in the sales tax would be unfair to poor Ohioans.