This morning, Scioto Analysis published a report on the current state of inequality in Ohio. This study serves as an update to a previous report on inequality released by Scioto Analysis in 2022.
The analysis finds that Ohio is currently less unequal than the United States as a whole. Ohio’s Gini Coefficient of 46.6 is two points lower than the national rate of 48.6. Geographically, this disparity is most concentrated in Ohio’s major urban centers and rural Appalachian counties. Inequality in Ohio is especially disparate for income distribution, homeownership rates, and housing cost burdens across race, age, and income level.
To demonstrate how policymakers can address inequality in Ohio, analysts evaluated the effects of several different policy options on inequality in Ohio.
A negative income tax is the most effective intervention method that was analyzed. A -5% negative income tax would reduce the Gini Coefficient from 43.3 to 42.8, a -16% rate would reduce it to 42.1, and a -50% negative income tax rate would reduce the Gini Coefficient to 39.9, an impact comparable to the entire federal income tax system.
Existing income taxes are effective at reducing inequality in Ohio. Current federal income taxes reduce the Gini Coefficient in Ohio from 46.6 to 43.7, and 2023 state income taxes reduce the Gini Coefficient even further to 43.3.
The transition to a flat income tax structure is projected to worsen inequality, increasing the Gini Coefficient to 43.6, while reverting back to 2003 Ohio income tax rates would lower the Gini Coefficient to 43.0.
Replacing property taxes with a progressive income tax would reduce the Gini Coefficient by 1 point, while replacing property taxes with sales taxes would have a negligible impact on inequality in Ohio.
Adding a new higher income bracket to Ohio’s state income tax structure would reduce inequality in Ohio, decreasing the Gini Coefficient to 43.1
While inequality has been on the rise in Ohio since 2014, policymakers have several tested policy options to help reduce inequality across the state. The full report can be accessed here.
