Forty-three years ago, in 1972, the Ohio state government imposed a progressive personal income tax. This move was an ill-conceived plan that intended to pay for capital projects and education and shifted income tax burden away from business and onto individuals. The reasoning was that reducing the income tax burden on the business community would forestall the migration of businesses out of the state. However, reality proved otherwise, with billions of dollars and thousands of residents leaving the Buckeye State for more promising environments. Governor John Kasich must attempt to stem this outbound tide, and his tax plan makes clear that he will take a forward-thinking approach.
Ohio’s recent history isn’t very sunny. In fact, between 1992 and 2011, the state lost $19.65 billion in annual adjusted gross income. The lion’s share of that loss was $6.8 billion to Florida, one of nine no-income tax states that do not penalize work in order to grow state revenues. States that rely on taxing personal income sustain damaging effects. Placing a burdensome price on work reduces incentives to engage in productive behavior and lessens economic efficiency.