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1 Scott A. Hodge, Ohio's Poor Tax Climate at the Heart of the State's Economic and Fiscal Woes 1 (2010)

handle is hein.taxfoundation/ffcahxz0001 and id is 1 raw text is: FOUNDATION January 7, 2010 No. 207 FISCAL FACT Ohio's Poor Tax Climate at the Heart of the State's Economic and Fiscal Woes By Scott A. Hodge Ohio lawmakers recently reached a last-minute deal to close the state's $851 million budget shortfall by delaying a scheduled 4.2 percent income tax cut. As many lawmakers acknowledged, the deal was just a band-aid solution and avoids addressing the more structural issues facing the state's finances. At the heart of Ohio's fiscal problems is a tax system and business climate that has been driving people out of the state for more than 15 years, resulting in a shrinking economy and a smaller tax base. At the same time, state government spending grew unchecked, resulting in a heavier tax burden on the state's remaining citizens. Ohio taxpayers now have one of the highest tax burdens in the nation. The key to reversing these trends and improving the long-term fiscal health of the state is a sensible reform of the state's tax system. 15 Years of Taxpayer Flight For more than 15 years, Ohio has seen more taxpayers leave the state than move into it. Chart 1, based on Tax Foundation analysis of IRS migration data, shows the net loss of taxpayers (or tax returns)' to other states between 1993 and 2008. We can see that while the state lost a substantial number of taxpayers during the early and late 1990s, the out-migration accelerated dramatically after 2003. Overall, the state lost 231,000 taxpayers between 1993 and 2008, but more than 105,000 of those taxpayers left within the past five years. 1 A tax return can represent a single individual, a married couple with children, a sole proprietor or a larger business enterprise such as an LLC or S-corporation. The 23 1,000 tax returns that Ohio lost during this period had 347,000 personal exemptions associated with them, so the state lost 1.5 persons for every tax return that left the state on net. Scott A. Hodge is President of the Tax Foundation

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