Question For Policy Matters Ohio, Zach Schiller: Was Tax Data Used In Your DDN Article Incorrect?

I sent the e-mail below this morning to Zach Schiller of Policy Matters Ohio.

Zach Schiller:  I am glad to see that the Dayton Daily News published your article “Ohio Needs Revenue It’s Lost Since Tax Cuts 4 Years Ago,” this past Saturday.

I am trying to understand the discrepancy between your data published in the DDN article and the data published in a Policy Matters article last April, “A Step Toward Fiscal Balance: Options for Ohio’s Income Tax,” written by Jon Honeck.

In your DDN article, you wrote, “Restore the previous 7.5 percent top rate of the state income tax on income over $200,000 a year. This would affect fewer than 2 percent of Ohio taxpayers and generate around $375 million a year.”

In a Policy Matters article published last April, Jon Honeck showed a chart (on page 6) that showed that the top 1% of Ohio’s incomes (Starting at $340,000) received 26% of the total income tax reduction. Given that the total income tax reduction per year, when the 2005 Tax Reduction Act is fully implemented, is estimated to be $2.2 billion, it stands that this top 1%, alone, received over $570 million of the tax reduction.

The Honeck article does not show what percentage of the total tax reduction was received by those incomes in excess of $200,000, but by analyzing Honeck’s chart, it seems a conservative estimate would be that incomes in excess of $200,000 received about 34% of the total tax reduction, and 34% of $2.2 billion is about $750 million. Using Honeck’s figures, it appears that the amount of tax reduction received by incomes in excess of $200,000 is twice what you reported in your DDN article.

The fact that the top 1% of incomes (those in excess of $340,000) received 26% of the income tax reduction has been a very unreported fact, and I’m surprised this fact was not included in you DDN article.  Focusing on this top 1%  of income, I feel, gives a more compelling argument for tax revision than looking at those incomes in excess of $200,000.  I’ve been using this 26% figure in a lot of articles, so I hope I’ve not been given wrong information.

These are some of the articles where I refer to the fact that 26% of the total income tax reductions from the 2005 Tax Reduction Act go to incomes in excess of $340,000:

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