Study: 10 years later, Ohio tax revenues still haven’t recovered from the Great Recession

Andrew J. Tobias - Advance Ohio Media, Cleveland (TNS)

COLUMBUS, Ohio — Four out of five U.S. states have seen their tax revenues recover to pre-recession levels, according to a new national study.

But not Ohio.

The national state-by-state analysis, released Tuesday by the Pew Centers for Charitable Trust, found that Ohio as of December 2018 remained 7.1% below its tax-revenue peak — the second quarter of 2008, when the state brought in more than $8 billion.

Overall, U.S. state tax revenues are up 12.6% from pre-Great Recession levels, including in 40 out of 50 states.

Tax revenues are up compared to their pre-recession peak in all the states that border Ohio: Indiana (+8%), Kentucky (+4.5%), Michigan (+3.9%) and Pennsylvania (6.1%).

After bottoming out in the first quarter of 2010, Ohio’s revenues mirrored the national recovery in state revenues, approaching pre-recession levels in 2013, the Pew data show. But revenues dropped precipitously that year. Pew researchers didn’t perform state-by-state analyses of tax changes. But the drop-off coincides with tax changes — a new income-tax cut, a sales-tax increase and the elimination of the estate tax — signed into law by then-Gov John Kasich.

Another drop registers in 2016, when a new tax cut took effect that made the first $250,000 in income for businesses and people who work for themselves tax-free.

Alaska, which was down 83%, is the lowest state below its 2008 peak. The state has no income tax and is heavily reliant upon tax on oil and natural-gas drilling. Other states where tax revenues haven’t recovered include Wyoming (-36.2%), Florida (-8.3%), New Mexico (-4.4%), New Jersey (-4%), Oklahoma (-2.8%), Louisiana (-2.%) Mississippi (-1%) and Missouri (-0.2%.)

Explaining their methodology, researchers said they used U.S. Census data to flatten seasonal volatility and controlled for inflation. Pew researchers defined “tax” as the collection of any compulsory amount of money, which also would capture fees.

Officials with the Ohio Department of Taxation declined to immediately comment on the study, other than to say they disagreed with its methodology. They did not elaborate on those concerns.

Andrew J. Tobias

Advance Ohio Media, Cleveland (TNS)

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