Op-ed: Let’s Talk About…Taxes
BY LIZZIE MARGOLIUS
I’ll be honest. I had no idea how to even begin this article, and I wrote at least 3 drafts. Why? Because taxes are complicated and because there is A LOT to say about them. Historically taxes have been around for thousands of years and are synonymous with personalities such as Matthew the Disciple, the Sheriff of Nottingham, Uncle Sam, and the present-day IRS. Digesting all the information on taxes is akin to drinking from a firehose at times, so we are going to make this into a multi-part series, and we are going to take it slow.
Let’s talk about the five federal taxes that are collected. First, there is federal income tax. Income tax varies from 10% (on income up to $11,000) to 37% (on income over $626,000). The top 10% of earners (those making over $170,000) pay 71% of all federal income taxes. Then there is payroll tax. Payroll tax is 12%, split between employee and employer, and Medicare payroll tax is 2.9%, split between employee and employer. Then there’s corporate income tax, excise tax (think alcohol, gas, tobacco), and capital gains tax. Most people utilize legal ways of lowering their pre-tax income, so they aren’t being completely gouged to death just in federal taxes. Federal tax revenue brings in $5.5 trillion annually with only half the United States population filing federal taxes, which brings federal taxes to about $35,000 per person. Ohioans, on average, pay $15,700 annually in taxes to the federal government.
Now, let’s talk about state and local taxes. Ohio ranks 9th highest in the nation for effective state and local tax rate coming in at 12.75%. Ohio has 18 different types of state taxes. We even have a tax (or as they call it, a fee) on replacing your tires. Ohio’s state income tax is tiered between 0% and 3.5%. Ohio’s state gas tax is $0.38, the 13th highest in the nation. And then there are local taxes, which vary: you might have a city tax, a school tax, property tax, and sales tax. If you live inside a city, you might pay 2.5% city tax, plus a 1% school tax, a 2.0% local sales tax, and then your property tax, which on average is about 1.4% per $100,000 valuation on your home. Ohio ranks somewhere between 7th and 11th highest in the nation for property tax (depending on the metrics).
What’s interesting about Ohio is that Ohio political leadership boldly claims to be “red” through and through with a supermajority Republican controlled state. But our tax burden and structure would say otherwise. Matt Mayer, of Opportunity Ohio, recently published this article about Ohio being worse than Illinois in spending. Ohio: Where Republicans Spend More Than Progressive Democrats in Illinois I encourage you to read it. Our elected officials don’t vote on spending and taxes like some of their “red” counterparts. 41 other states rank lower for taxes than we do, including a slue of “red” states. This idea of vote “red” and save money is simply not true. Both parties are totally out of touch with the average American and both parties love to spend our money.
Ohio’s tax structure needs major reform if Ohio is to survive, so let’s talk about Ohio’s income. Ohio’s median household income hovers around $68,000, up from $47,000 in 2010. But if we adjust $47,000 to the rate of inflation, $47,000 in 2010 is worth $69,000 today. Likewise, if you reverse engineer $67,000 from today to 2010, it was the equivalent of $98,000. In other words, median income from 2010 to now is basically flat, and the dollar is worth about 78 cents of what it was in 2010. In 2010 even $47,000 went a lot further than $68,000 today. Inflation is the biggest consumer of income, and our consumer debt proves this. Household debt in 2010 was $9.5T and today it is $18.2T with debt delinquencies rising. If paying for groceries, gas, and bills consumes most of your income, then how do you pay for everything else your family needs? Debt.
The cost of doing business has gone up and continues to climb, but income remains relatively flat. In Ohio, in particular, taxes keep going up. More than 50 cities have raised their city sales tax since January. Cities have increased their city income tax, and property taxes in Ohio have climbed 30+% on average.
Matt Nolan, president of the County Auditor’s Association of Ohio issued a warning of another 25-30% property tax increase looming on the horizon in the next few years. Ohio is in dire shape. Income is not keeping pace with taxes and spending. So, it’s time that we have a come-to-Jesus meeting with ourselves. I know talking about taxes is not the most tantalizing topic, but it is important. In the next article we are going to specifically focus on the question of “where’s all the money going?” Just like you saw with DOGE at the federal level, taxpayer dollars are being wasted on wants and not needs. And the same thing is true at the state and local level as well.
While I was writing this article, my comedic husband would occasionally chime in “Where’s the money, Karen?!” (paraphrasing the famous scene from Goodfellas when Henry’s wife, Karen, flushes down the last of their money). So it got me thinking of other famous movie quotes about money…Enjoy as we look forward to the next part of this series.
“KEVIN!!! You spent $967 on room service!!!” Home Alone 2
“Show me the money!” Jerry Maguire
“Greed, for lack of a better word is good.” Wall Street
“The lawyer with the briefcase can steal more money than the man with the gun.” The Godfather
