The Institute on Taxation and Economic Policy (ITEP) released its 2024 Who Pays? Report. The report is an analysis of the tax systems in all 50 states and assesses the progressivity and regressivity of state tax systems by measuring the effective and state and local tax rates. 

According to ITEP, Ohio has the fifteenth most regressive state and local tax system in the county making income disparities larger after state and local taxes are collected than before. Ohioans in the bottom 20 percent of earners pay 12.7 percent of the family income in taxes, compared to 6.3 percent for those in the top one percent of earners. Sales and excise taxes and property taxes hit the lowest earners the hardest. 

This is not news to us or our Legal Aid partners. We have been advocating for tax policy changes that would ease the burden on low-income Ohioans, including a refundable state earned income tax credit and property tax relief for seniors on fixed incomes. 

The General Assembly created a new study committee to examine property tax issues. We hope the committee will examine the property tax burden on low- and fixed-income Ohioans.



Federal Legislators Introduce Tax Relief for American Families and Workers Act of 2024 Expanding the Child Tax Credit

The framework for the Tax Relief for American Families and Workers Act of 2024 was released last week by Sen. Ron Wyden (D-Oregon) and Congressman Jason Smith (R-Missouri). The legislation was introduced as H.R. 7024 on January 17, 2024.

This legislation expands the child tax credit for three years and allows families with multiple children to take advantage of the credit. While smaller than the child tax credit expansion that expired at the end of 2021, the proposal focuses on getting more of the credit to the roughly 19 million children who currently get a partial credit or none at all because their families’ incomes are too low. The current cap for the refundable child tax credit is $1,600. That amount would increase to $1,800 in tax year 2023, $1,900 in tax year 2024, and $2,000 in tax year 2025, and begin adjusting for inflation in 2024. 

According to the Center on Budget and Policy Priorities, in the first year, about 16 million children under 17 in families with low incomes who don’t now get the full credit would benefit. This includes nearly 3 million children under age 3. 

The bill also increases the Low-Income Housing Tax Credit (LIHTC), which provides tax incentives for providing rental housing for lower-income people. Estimates show that the expansion of LIHTC would enable the construction of more than 200,000 affordable housing units.

The U.S. House Ways and Means Committee voted 40-3 to advance the Tax Relief for American Families and Workers Act of 2024 on January 19, 2024.

Joint Committee on Property Tax Review and Reform Holds First Meeting

The Joint Committee on Property Tax Review and Reform was created during the last biennial budget (House Bill 33—135th General Assembly) and will be jointly chaired by Rep. Bill Roemer (R-Richfield) and Sen. Louis Blessing (R-Colerain Township). The committee will produce a report making recommendations on reforms to Ohio’s property tax law no later than December 31, 2024. The goal is to review all aspects of Ohio’s property tax law including levies, exemptions, and local political subdivision budgeting. Other members include Sens. George Lang (R-West Chester), Sandra O’Brien (R-Ashtabula), Hearcel Craig (D-Columbus), and Bill DeMora (D-Columbus), as well as Reps. Tracy Richardson (R-Marysville), Tom Young (R-Washington Township), Daniel Troy (D-Willowick), and Bride Rose Sweeney (D-Westlake).

On January 10, 2024, the committee heard testimony from the Legislative Service Commission (LSC) and Department of Taxation (ODT). LSC discussed the development of property taxes, valuation, how property taxes are levied and authorized, credits, reductions, and exemptions, and ODT focused on ODT's function in property tax administration in relation to local control. 

The committee will be meeting next on Wednesday, January 24, 2024, to hear invited testimony from County Auditors’ Association of Ohio and Ohio Board of Tax Appeals and can be watched live on www.ohiochannel.org.