This opinion piece was first published in The Columbus Dispatch.

Fortune favors the bold, the old saying goes. And when it comes to reforming Ohio’s tax code the axiom is quite literally true.  

A bill in the Ohio House of Representatives would dramatically improve Ohio’s income tax policy by creating a single flat tax rate of 2.75 percent on taxable income over $26,050.

The bill would do away with the current multi-rate policy and give Ohio the lowest income tax rate in the Midwest and the second lowest among all states that tax income.  

Ohio should adopt a low, flat rate income tax for several reasons. 

First, flat taxes are much simpler to administer and file. Progressive tax systems with exemptions, credits, and deductions are government’s gift to accountants, lobbyists, and lawyers, not taxpayers.

“Keep it simple, stupid” proverbially describes so many systems and circumstances—perhaps none so well as tax codes. Simple tax codes are more efficient, easier to understand, and therefore more cost-effective for the taxpayer and tax collector. 

Second, flat taxes encourage economic growth and investment by not taxing investment income twice, once as earned wages and again when the investment pays or appreciates.

Economic research shows that income taxes reduce investment returns, trailing only corporate taxes as the second most harmful form of taxation. We estimate that moving to a flat tax will create thousands of new jobs and increase Ohio’s GDP by $5 billion by the next budget cycle.

As many states have rightly recognized, investment drives economic growth. Some of the fastest growing states like Texas, Florida, and Tennessee have already eliminated their income taxes entirely and made themselves more attractive to entrepreneurs, workers, and retirees living off invested dollars that have already been taxed.  

Third, a low, flat income tax rate will save Ohioans money, allowing more workers to keep more of their own earnings. A flat tax will save Ohio $1.7 billion in fiscal year 2024. And eliminating wasteful spending and tax giveaways to special interests will save taxpayers $2.7 billion over the biennial budget cycle.

A billion here, a billion there, and soon we’ll be talking about real money. These are significant taxpayer savings that will let wage earners, not politicians, decide how and when to spend the money they earn. And with Ohio’s rainy day fund flush with record cash, now is the perfect time to replace a broken tax code with one that works. 

Finally, moving to a low, flat tax rate will make Ohio more economically competitive. States compete to attract new workers and businesses. Many reasons factor into where businesses and families choose to locate and live, and income taxes are undeniably one of them. Twenty states already either have a flat tax or no income tax at all, and at least three more states—Iowa, Georgia, and Mississippi—appear poised to join them. As those low- or no-income tax states become more attractive to businesses and their employees, Ohio becomes less so.  

But fortune still favors the bold. And if Ohio lawmakers will boldly reform an outmoded tax code that discourages hard work and punishes investment, economic growth and prosperity for Ohio will follow. It’s axiomatic. 

Rea S. Hederman Jr. is executive director of the Economic Research Center and vice president of policy at The Buckeye Institute. Donovan O’Neil is state director of Americans for Prosperity—Ohio.