Columbus, OH – On Monday, The Buckeye Institute released a new policy report, Sustainable Ohio: How to Fund Ohio’s Cities in the 21st Century, which offers a blueprint for how Ohio can move away from its outmoded local income tax system—that heavily relies on nonresident taxpayers—and toward a property or sales tax system that will fund city services in a much more sustainable way.

“The pandemic expedited the long-anticipated shift to telecommuting for Ohio’s workforce and could sound the death knell for the state’s municipal income tax regime—a system that is a national outlier and far less stable than other funding mechanisms,” said Greg R. Lawson, a research fellow at The Buckeye Institute and co-author of Sustainable Ohio. “In this report, The Buckeye Institute compares different taxing regimes—property, sales, and income—and outlines a strategy for how Ohio’s cities can transition away from a municipal income tax regime and toward a fairer, more stable, long-term blend of property and sales taxes to pay for local government services.”

In the report, The Buckeye Institute offers a comparison of the three most common types of taxes that fund city services—property taxes, sales taxes, and income taxes. Of these three, income taxes—which none of the fastest-growing cities in America have—are the most economically damaging and far less efficient or stable than property or sales taxes. 

The authors go on to outline a strategy that leverages temporary federal aid to make some of the transition difficulties easier, spends local resources responsibly and transparently, and rethinks local development strategies—including tax abatements and zoning rules, that currently erode the property tax base—to better provide government services, attract and retain businesses and workers, and offer residents the economic growth and opportunity they deserve.  

Sustainable Ohio was co-authored by Greg R. Lawson, a research fellow at The Buckeye Institute; Rea S. Hederman Jr. executive director of the Economic Research Center at The Buckeye Institute and vice president of policy; and Andrew J. Geisler, a former legal fellow at The Buckeye Institute’s Legal Center.

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