Taxpayers filing last-minute returns today will be paying the lowest state income tax Ohio has seen in 30 years.
The rates that went into effect this year for last year’s earned income continue a downward trend and haven’t been lower since 1981 for people earning less than $80,000 per year, according to a Dayton Daily News analysis of Ohio Department of Taxation records.
While income tax rates have fallen, income tax collections have continued growing. Increased revenue from income tax collections is not directly caused by the falling rates, according to Richard Stock, University of Dayton’s Director of Business Research Group.
“Tax collections rise when incomes rise,” Stock said.
“Incomes increase when gross domestic product increases. Real GDP has been rising all through this period except at particular recessionary points … so you would expect incomes and therefore tax collections to rise.”
Tax collections fell to a 10-year low in 2010, but rose by 11.8 percent in 2011.
Revenues generated from state income taxes nationwide were up 9.8 percent during the same period, according to a report the U.S. Census Bureau released last week.
Ohio raised $8.8 billion in income tax revenue in 2011, a significant increase from 2010. That 2011 figure accounted for 35 percent of the $25.2 billion collected from income, property, sales and other state taxes, according to the same report.
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