A recent study shows that Ohio ranks among the worst states in the country in terms of percentage of income paid in state and local taxes.
Ohioans were taxed at 13.05 percent, the ninth highest rate in the country, according to WalletHub. The personal finance site studied all 50 states and the District of Columbia and factored in sales, real estate and vehicle property taxes along with income taxes.
The average Ohio household paid $7,580 in taxes, more than 21 percent higher than the national average.
Greg Lawson, a research fellow at the Buckeye Institute in Columbus, said the ranking is indicative of the state’s main problem with taxes.
“One thing that sticks out is that we have a lot of different taxes,” he said. “There’s not particularly one tax that’s awful in and of itself, but it’s the fact that we tax everything is really the critical thing.”
It’s also not only what is taxed, but who has the right to tax it. For example, each of Ohio’s 88 counties can add its own sales tax on top of the state’s 5.75 percent. In Hamilton County, the total rate is 7 percent as some of the proceeds go toward paying for the financing of two major league sports stadiums in Cincinnati.
In addition, Ohio also lets municipalities and school districts levy an income tax, Lawson said.
“Thus, it is possible to be quadruple taxed in Ohio on income depending on where you live,” he added.
It makes matters worse when an employee works in one jurisdiction and lives in another, meaning businesses must spend more time and resources to properly determine tax withholdings.
Not only are Ohio taxes complex, but they are also high. WalletHub’s data reveals the state’s property tax rate ranks 39th in the country. It’s sales and excise taxes are 32nd, while income taxes come in 44th.
The study comes out at a time when some lawmakers are pushing for tax reforms in Columbus, particularly in light of the debate about a proposed increase in the gas tax to help the Department of Transportation’s budget and construction financing issues. Some have called the state to cut other taxes if the gas tax is raised.
But even with Republicans controlling both legislative chambers and the governor’s office, Lawson doesn’t express much optimism for it.
“I think the state Senate has an appetite for more tax reform,” he said. “The governor (Mike DeWine) and the Ohio House do not have the appetite, it appears. They view now as a time to ‘invest in Ohio’ after years of tax cutting under the Kasich Administration.”
Of Ohio’s neighboring states, only Pennsylvania (49th) ranked worse at 13.78 percent. However, No. 35 Indiana (11.76 percent), No. 38 Kentucky (12.33 percent) and No. 40 Michigan (12.43 percent) all were comparable to the Buckeye State.
Only West Virginia, which at 9.66 percent ranked 16th in the country, rated substantially better than its neighbor.
According to the study, Alaska resident enjoyed the lowest total tax rate at 5.7 percent, while Illinois at 14.9 percent ranked worst.