COLUMBUS, Ohio (WCMH) — Republicans and Democrats at the Ohio Statehouse want to put more money in your pocket. But the question is: should lawmakers pass property tax relief, state income tax cuts, or can the state do both?
Property Taxes
“The simple truth is — we’ve got to get work done,” State Sen. Hearcel Craig (D-Columbus) said.
“People in my area are getting inundated with huge property valuation increases,” State Rep. Josh Williams (R-Sylvania) said.
Lawmakers on both sides of the aisle agree that Ohioans need property tax relief, but even with consensus that something needs to be done, efforts have been stalled for years.
Ohio Senate President Rob McColley (R-Napoleon) said that is, in part, because of how bogged down and “screwed up” the system has gotten.
“The legislature, over the past three to four decades, has done a really good job at screwing up our property tax system, I’m willing to admit that,” McColley said.
There are already more than a dozen bills that have been introduced to try and bring Ohioans relief — everything from a system that would allow Ohioans to defer their payments to expand the homestead exemption and just bring more clarity to everything.
“It’s a very complicated issue,” Craig said. “So, I would submit to you that all of those things need to be looked at, clearly, thoughtfully.”
Craig, who served on a property tax study committee, thinks the priority for passing relief needs to first be for Ohioans who are low income, marginalized and seniors.
Some lawmakers suggest starting from scratch and rebuilding the system. McColley said it is going to take several revisions to bring meaningful relief.
“The system, when it was put in place, was meant to be largely anti-inflationary,” he said. “Through changes over the last three to four decades, it has become incredibly inflationary, where you’re having unvoted tax increases happening every single time there’s a revaluation. People are seeing the sticker shock in some cases of seeing a 30% increase in their property taxes.”
He said that, at the very least, things need to be easier to understand for the average taxpayer.
“We need to have a serious conversation ultimately to provide a system that, at the bare minimum, is more transparent and accountable to the taxpayers,” McColley said. “I would say it should be universally agreed, for the most part, that our property tax system is very difficult to understand, it’s very complicated.”
The concern with property tax relief is that it takes money away from local programs and public schools, which are partly funded by those means. Democratic leaders said state lawmakers need to ensure public schools are funded properly in the state budget.
“We need to invest in our schools and in our workforce, so we can provide property tax relief. And we should. But that should be our focus,” State Rep. Dani Isaacsohn (D-Cincinnati) said.
Some property tax relief may be added to the state operating budget, which needs to pass by the end of June. Ohio House Speaker Matt Huffman (R-Lima) said passing something that really brings Ohioans relief could take the better part of two years.
“This is essentially a 30- or 40-year problem that [has been] created, and so I think it’ll probably take us, not only this budget cycle but the rest of the general assembly to work our way through that,” Huffman said.
State Income Taxes
As lawmakers debate the most effective way to bring Ohioans property tax relief, they also wonder if they can make progress in flattening the state income tax.
In 2023, lawmakers brought the highest state income tax rate down from nearly 4% percent to 3.75% and eliminated a tax bracket completely but some want to go even further.
“I think we need to continue down this path of getting to a zero-income tax here in the state of Ohio,” Williams said.
A total phaseout of the personal state income tax would result in nearly $14 billion in revenue lost to the state. Williams argued that a phase-out of the income tax would make Ohio more “economically viable” in the long run.
“More Ohioans should be able to keep more of their paycheck in their own pockets and decide what they want to invest in by purchasing items in the consumer market,” Williams said.
Ohio House Minority Leader Allison Russo (D-Lakewood) said she worries that the loss of revenue to the state will have to be made up by “over-reliance” on sales and use taxes.
“We know that that disproportionately affects low- and middle-class Ohioans at the check-out counter,” she said.
McColley argued that a reduced income tax makes Ohio more attractive to companies, like Intel or Honda, looking to bring their business here. He said flattening or eliminating the income tax will bring economic development wins to the state.
“There’s a good public policy justification for reducing the tax burden on Ohioans,” McColley said.
There is a bill to bring the state income tax rate down to a flat 2.75%, no matter how much you earn. Democratic leaders question if it is really in the best interest of Ohioans to focus on that legislation and overall effort.
“Nobody is calling my office regarding income taxes, but we get lots of calls in my office regarding property taxes,” Craig said. “And so, we’ve got to be able to look at that issue clearly.”
“We desperately need property tax relief, but we can’t fund it on the back of cutting income taxes for the wealthiest Ohioans,” Isaacsohn said. “It is not what people are clamoring for. It’s not what our office is hearing about we’re hearing about the desperate need for property tax relief, especially among our seniors.”
As that is being debated, Republican lawmakers are looking ahead to the viability of creating new programs or expanding others, like the state’s child tax credit.
“Every tax credit we introduce or every tax deduction that we introduce makes it harder for us to get to our ultimate goal, that being, eliminating the income tax or having a flat income tax in the state of Ohio,” McColley said.
The state operating budget must pass by the end of June, when some of these tax policies could be included.
