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Ohio Governor Says Tax Cuts Are Causing Revenue Shortfall

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Ohio Gov. Mike DeWine said that a series of recent tax cuts, which provide an outsized benefit to the wealthy and corporations, are one of the driving factors behind lower-than-projected revenue collections in the state. Revenue is down by roughly half a billion dollars compared to expectations for this point in the year. This is a significant shortfall, equal to more than two years of funding for the state’s need-based college grant program.

Republican members of the state legislature are blaming slowing economic growth for the emerging revenue gap, but that is likely compounding the problem rather than causing it. The more straightforward culprit is a pair of personal income tax cuts passed in 2021 and 2023. The cuts are already costing the state nearly $2 billion in lost revenue each year — roughly double the amount the state spends on its Department of Children and Youth, which provides child care, early learning, adoption and foster care, and child welfare services.

Ohio legislators and governors have been enacting tax cuts that disproportionately benefit the wealthy for the past two decades. Today, the richest 1 percent of Ohioans on average pay $50,000 less in income taxes than they did in 2005, and the most recent income tax cuts reinforced the state’s upside-down tax system. Low-income Ohioans pay more than twice as much of their income in state and local taxes as the richest do.

Legislators’ attacks on the state’s personal income tax have also helped entrench white wealth and influence. White households hold 87 percent of all wealth across the country. Because Ohio’s income tax cuts benefited wealthier households, average benefits were higher for white households than Black households.

Ohio also made a flurry of other costly tax and budget choices last year. Most notably, the state cut its Commercial Activity Tax and removed income limits for its private school voucher program, leading to a spike in enrollment. These changes, which mostly benefit corporations and wealthy families, could exacerbate the state’s revenue shortfalls.