Plenty of taxing authorities seek your wallet
As tomorrow’s filing deadline nears, Americans are calculating their 2017 federal, state and local tax obligations. And the conservative Tax Foundation ranks Ohio 27th among states in overall tax burden.
In 2017, Americans paid 31 percent of their income in taxes — $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total of $5.1 trillion, the foundation reports.
On average, total tax obligations required Americans to work 113 days into the year — to April 23 (Tax Freedom Day) — to support government at all levels, the foundation calculates. Ohioans achieved their tax freedom three days earlier.
In a big election year, voters should be armed with some basic facts about their state’s tax burden and how it compares with the rest of the nation.
Ohio steadily has reduced state income tax rates while expanding the state sales tax base. In the mid-1980s, Ohio’s top marginal income tax rate approached 9 percent. Today, it’s under 5 percent — in the low-to-moderate range among the 43 states that impose a personal income tax.
In per-capita personal income tax collections, the foundation ranks Ohio 36th in the nation at $703, compared with the national average of $1,068. However, Ohio is one of only 14 states that permit local governments to impose payroll taxes. The combined state-local income tax burden pushes Ohio up to 16th in the nation at $1,186 per capita, above the national average of $1,144. Local income taxes are limited to 1 percent without a vote of the electorate.
In all, 616 Ohio municipalities — 240 cities and 376 villages — levy income taxes ranging from 0.5 percent to 3 percent. In Columbus, it’s 2.5 percent.
Ohio also allows school districts to seek voter approval of income taxes. Of Ohio’s 614 school districts, 190 have them, including three in Franklin County — Bexley and Canal Winchester at 0.75 percent and Reynoldsburg at 0.5 percent.
While reducing state income tax rates, Ohio’s legislators have been expanding the state sales tax base to cover more services. From 1984 through 2015, state income tax collections surpassed sales tax collections. No more. In 2017, the state collected $10.8 billion in sales taxes compared to $7.9 billion in income taxes. The state’s emphasis on the sales tax is likely to continue.
Since September 2013, the state sales tax has been 5.75 percent. However, the state allows counties and transit authorities to levy additional sales taxes. All of Ohio’s 88 counties do so. Franklin County commissioners impose a 1.25 percent sales tax. COTA collects a 0.5 percent sales tax; half is permanent, and half is a voted levy that expires in 2026. In all, Franklin County’s 7.5 percent sales tax is second highest in the state, behind Cuyahoga County’s 8 percent levy.
Ohio’s aggressive push on sales taxes has elevated the Buckeye State’s average weighted state-local sales tax to 7.15 percent — 19th in the nation. This has sharpened the debate over the fairness of continued efforts to slash the state income tax — Ohio’s only progressive tax.
The state’s oldest tax, on property, dates to 1825 and is the primary revenue source for schools and county-based human services. Property taxes cannot be increased without a public vote. Ohio’s per-capita property-tax collections, at $1,271, rank 28th in the nation, below the average of $1,518.
Bottom line: targets for tax ire abound.