By John Hilber / Broadcast version by Farah Siddiqi reporting for the Kent State NewsLab-Ohio News Connection Collaboration.

Republicans in the Ohio House of Representatives have introduced legislation that would phase out the state income tax and do away with the commercial activity tax, which is Ohio's main tax on businesses.

House Bill 386 and Senate Bill 327 were introduced in January. Both bills would continually decrease the income tax rate for Ohioans, aiming to eliminate it by 2030.

Bill co-sponsor Sen. Steve Huffman, R-Tipp City, said this is the second time he has introduced a bill to eliminate Ohio's income tax. The Senate bill is co-sponsored by George Lang (R-West Chester).

The House bill is co-sponsored by Reps. Adam Matthews, R-Lebanon, and Brain Lampton, R-Beavercreek.

"We need to have a leaner government, and the money is better spent by the taxpayers," Huffman said. "Also to be competitive with other states. If a business is going to locate in Ohio, they know their employees are going to get 3-4% less in pay to pay the income tax that they wouldn't have to pay in other states."

Opponents of the bill say the elimination of income tax would cause the state to lose funding for other services that are important to Ohio.

"If you were to eliminate the income tax, if nothing else was done, you would be cutting annual support to local governments, and the public libraries - each of them - by almost $200 million per year," said Zach Schiller, a research director at Policy Matters Ohio. "You would be reducing support for public safety, or everything that cities, villages and townships spend money on."

"This is a wildly irresponsible thing to do," Schiller added.

Eliminating the income and the commercial activity tax would cause a $13 billion deficit, according to the Ohio Capital Journal. The figure is about 15% of Ohio's 2024 fiscal year overall revenue.

"If there's no replacement of revenue with property tax and sales tax, the state will have to cut spending, and the biggest categories of spending for the state are education and Medicaid," said David Brasington, a professor in the department of economics at the University of Cincinnati. "If the revenue is replaced by sales and property tax hikes, that wouldn't necessarily be the case."

Huffman believes the state of Ohio would not see budget shortfalls during the process of phasing out income tax, in part because the state has a large rainy day fund.

"I also think that there would certainly be a better business environment," Huffman said. "To be able to bring businesses to Ohio because we have less of a tax structure, but also as retailers - people will have more money to circulate through the economy to buy goods and services."

But Schiller said Ohio has cut income taxes in the past, and it hasn't yielded the results that Huffman hopes for.

"We've reduced, especially, the rates that upper-income Ohioans pay, we've created a business income deduction for business owners, and where has this gotten us?" Schiller said. "Our median household income still trails the national average; our job growth has trailed the national average. Ohio's economy has not, in fact, met national averages despite almost 20 years of income tax cuts."

The current state income tax ranges from 2.75 to 3.75%, with households making less than $26,050 having a 0% tax rate.

The median Ohio household earns $66,990 per year, according to the U.S. Census Bureau. Under the current tax code, that household would pay up to $1,842.23 in Ohio income taxes.

Opponents of the bill fear that a further income tax cut would result in the wealthiest Ohioans paying less in taxes.

"Anytime you cut income taxes, it is going to disproportionately benefit the higher income people, because they're the only ones that pay an income tax," Brasington said.

In addition to the income tax being cut, the bill would also eliminate the commercial activity tax (CAT) for businesses in Ohio, which is a tax on what businesses sell. The CAT applies only to companies that have over $150,000 in sales. Only about 10% of Ohio businesses pay the CAT.

"Small businesses do not pay the tax," Schiller said. "If we eliminate it, we're basically saying the biggest companies in Ohio don't need to pay business tax."

Brasington pointed out that if Ohio were to eliminate the income tax, Ohio would be the only state in the region to be without it, which could make the state more attractive for businesses.

He also said that more wealthy individuals are sensitive to tax changes, meaning that if Ohio eliminates income tax, it could influence more wealthy people to move to Ohio - which could in turn aid in the creation or expansion of businesses.

"What people want is the level of services and types of services they like, but they want it done without waste at the lowest possible tax rate that you can get," Brasington said. "So if you just cut taxes, then it will favor certain people and certain businesses, and they will be drawn [to Ohio]. But certain people and businesses may be pushed away if those cuts and taxes are also accompanied by a decrease in services."

If the legislation passes, Ohio would become the tenth state in the U.S. to eliminate the state income tax.

"I think that it will make it that much less likely that we'll have a state with well educated, healthy residents with a full range of opportunities," Schiller said. "We'll have a much more unbalanced tax system that is both unable to meet the needs of Ohioans and shifts much of the cost to low- and middle-income people. It will be much harder for Ohioans to live the happy, productive lives that we all would like."

The House and Senate versions of the bill are currently before each chamber's Ways and Means Committee.


This collaboration is produced in association with Media in the Public Interest and funded in part by the George Gund Foundation.


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Just as inflation starts to ease, Mississippi small businesses face another looming threat: the potential expiration of the small business deduction.

It is also called the Qualified Business Income deduction and if Congress does not renew it, it could affect nearly 266,000 small businesses in Mississippi, which employ more than 430,000 people.

Leah Long, Mississippi state director for the National Federation of Independent Business, said the Main Street Tax Certainty Act, which has bipartisan support, is set to expire in 2025. It is the law allowing small companies to deduct up to 20% of their qualified business income.

"It's a massive hit to their business, because they rely on that," Long stressed. "They're also facing issues like inflation, cost pressure and the uncertainty of the economy. So right now, the biggest focus is on that and getting the congressional members to sign on to support it, to reinstate it and make it permanent."

The Federation's August jobs report found 40% of small business owners had job openings they could not fill in August, up two percentage points from July.

Long pointed out if no action is taken by Congress, it would amount to a big tax hike for nine out of 10 small businesses nationwide, compromising their ability to grow and hire workers.

"When small businesses are doing well and they have more money, they're able to invest more into their business, they're available to best invest more into the economy and also in their communities," Long explained. "These small business owners are the ones that sponsor your kids' T-ball team."

She noted while measures like the Inflation Reduction Act have provided some aid, passing bills like the Main Street Tax Certainty Act will be crucial to support Mississippi business owners.


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A new report shows minimum wage increases have had little effect on the number of jobs in Maryland and nationwide.

While the rhetoric around increasing the minimum wage often comes with the caution it will reduce low-wage employment, a new review of decades of research showed most studies found no job losses after the state or local minimum wage is raised.

Ben Zipperer, senior economist for the Economic Policy Institute and the review's co-author, said raising the minimum wage has unquestionably benefited workers.

"Minimum wages very consistently have ended up raising the incomes of low-wage workers," Zipperer pointed out. "They have done so in a way that doesn't cause any big negative employment shocks or big disruptions in their local economy."

In Maryland, the state minimum wage increased to $15 an hour Jan. 1. The minimum wage in Montgomery County increased July 1 to $17.15 for large employers, and $15.50 for mid-size employers.

The latest numbers in Maryland show the state's job growth rate increased 1.2% in the first seven months of this year, exceeding the national average. The state's labor force participation rate also increased to 65.5%, the highest number since September 2020.

Zipperer noted the studies showed raising minimum wages has other benefits.

"What does happen is that employee turnover falls dramatically and that's because the job is suddenly more attractive to workers when you pay them more," Zipperer emphasized. "That's one of the reasons why you don't actually see big falls in employment after a minimum wage increase."

He added minimum wages are one of the most well studied topics in economics. Researchers built an online repository of studies going back to 1992, and will add new studies as they are published.


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Toledo's historic Dorr Street Corridor was once the beating heart of Black culture, wealth and business in the city. Now, community leaders and local politicians are striving to restore its former vibrancy.

Decades of urban renewal projects, including the construction of the interstate, eroded much of what was once known as "Black Wall Street."

Anita Lopez, a Lucas County Commissioner, emphasized the importance of economic development in revitalizing this historic area.

"When we have construction, we have businesses opening, that means jobs, jobs, jobs," Lopez pointed out. "And that's one of my promises, to help infuse employment opportunities and create opportunities for individuals to earn more money, and make money while doing construction."

Lopez's vision aligns with ongoing redevelopment efforts for the Dorr Street Corridor, with plans for new businesses and housing. However, some community members remain skeptical, questioning whether the project will truly benefit the local population or lead to gentrification.

Groups like the African American Legacy Project of Northwest Ohio are hopeful the area can return to its historic roots.

Charlesena Smith, a longtime Toledo resident and volunteer with the African American Legacy Project, is working to ensure redevelopment focuses on restoring Black ownership and creating a safe, inclusive environment for residents and visitors alike. Smith recalls the corridor's former glory and said she is hopeful for its future.

"I would like to see this place go back to what it used to be," Smith stressed. "Owning our own business, bringing the people that's coming through here (who) can stop by and feel safe. That's exactly what I think should happen."

The efforts are seen as steps toward reclaiming a part of Toledo's history while providing modern-day economic opportunities. As community members and political leaders push forward, Toledo's Black Wall Street could once again be a cornerstone of local wealth and culture.


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