Scott Drenkard Testifies in Ohio Legislature

May 7, 2013

Tax Foundation economist Scott Drenkard testified today before the Ways and Means Committee of the Ohio House of Representatives on HB 5, a municipal tax reform bill which offers a step in the right direction toward a simplified income tax code. His written remarks are available here, with an excerpt below.

I’m pleased to have the opportunity to speak today with regard to H.B. 5, a bill to reform elements of Ohio’s municipal tax system. While we take no position on the bill, I hope to give some perspective based on our research.

In 2011, we wrote a paper on city- and county-level income taxes, and found that of the 17 states that rely on local income taxes, Ohio has among the highest rates. In 2010, local income tax collections as a percentage of state personal income were 1.06 percent. The only state with higher effective rates is Maryland.

However, sound tax policy is not just about how much money is collected. It is about collecting revenue for necessary government services in the most efficient way possible. Ohio’s municipal tax system is far from that ideal. H.B. 5 does a great deal to remove some of the complexity built into Ohio’s municipal tax system. I’m hoping it represents a start to a movement by lawmakers to make the code more sensible and user-friendly. (Continue reading)

More analysis on Ohio available here.

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