Gov. John Kasich wants to increase Ohio’s sales tax by a half-percentage point, a move that would add pennies, nickels and dimes to most purchases.
But over the course of a year, what would the tax hike cost you?
The answer for a typical Ohio family is likely close to $70 a year in new taxes – more if it’s a year when the family makes a big purchase such as a new car.
The sales tax is pretty straight forward. Everyone – regardless of income – pays the same rate. The more you spend, the more you pay.
But lower-income people normally pay a higher share of their income in sales taxes. This is why it’s called a regressive tax.
This is because people who make more money generally don’t spend as much of their income on taxable purchases – often socking money into savings or investments, or services that are not subject to sales taxes. As a result, the share of their income spent on sales taxes is typically lower than those who make less.
Concern over the regressive nature of the sales tax is a reason why groceries and take-out food are not taxed in Ohio. But, as shown by the IRS estimates, this does not eliminate the issue.
Kasich’s budget plan does include other income tax savings targeted for middle- and lower-income people.
Click here to read more of this story which includes lots of details on the tax increase’s potential impact.
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