What if Ohio eliminated the state income tax? Would the state go broke or would the economy flourish? Even though Gov. John Kasich has not introduced any bill, measure or initiative related to eliminating Ohio's income tax that has not stopped liberal-leaning publications from insinuating such a move is hovering behind the next corner. If Ohio's fiscally responsible governor is interested in exploring the idea, it would be more than a little out of character for him to jump in with both feet and not conduct extensive research on the economic impact. Liberals often have a difficult time understanding the difference between being a man of action and making rash decisions.
No Income Tax States
Although every state has increasing debt and looking for ways to trim spending, the public services in states without income tax are not faring any worse than those who tax citizens on their work income. Nine states currently have no state income tax and have experienced both a population and economic boom. States that do not fund public services through resident income taxes include Florida, Texas, Nevada, Alaska, New Hampshire, Tennessee, Washington, South Dakota and Wyoming. Crime is not running rampant in these states. Schools are operational. Fires are extinguished and local governments call courts to order on a daily basis. Forbes magazine has featured these states multiple times as among the best places to open a business, live and retire.
Sales Tax
Sales tax rates vary from coast to coast, but only four states that do not collect income tax are on the top 10 highest sales tax collection list. Florida, New Jersey and Texas are among the states with the highest deficit shortfall projected for 2012.
Real Estate Taxes
How do states without income tax afford public services? Sales and real estate taxes provide funds for schools, social services programs, law enforcement and fire departments. States without personal income taxes tend to attract businesses that create jobs and aid the real estate industry. Only Wyoming is ranked among the top 10 states charging the highest real estate taxes.
State Deficits
California, which has the highest personal income, real estate and sales tax rates, is also ranked as the state with the largest deficit. The connection between state income tax, sales tax and debt is one which is best left to a learned economist. However, financial statistics do prove that eliminating personal income tax does not mean that a high sales tax or increased debt is certain to occur. The struggling economy and massive government over-spending are also factors in determining why deficit have occurred.
Whether or not any serious discussion about the elimination of Ohio's state income tax will occur remains to be seen. If such a measure attracts more employment opportunities to the state without causing massive increases in sales and real estate taxes, it will likely be welcomed by Ohioans.
Tara Dodrill is a political, eco-green and travel writer. She is a real estate agent and former elected official, public school employee and coach from Ohio who has worked as a newspaper journalist, editor and photographer for magazines and online media outlets. Follow Tara on Twitter.
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