Income inequality persists in Ohio, and a new reports says a GOP tax law will make it worse
An updated analysis of census data shows that the gap between rich and poor persists in Ohio. And a new Republican “flat” income tax now in effect will only make it worse, the analysis said.
The richest 0.1% of Americans have seen their cumulative wealth spike by 53% between 2018 and 2025 — to $22.48 trillion, according to Federal Reserve data analyzed by the Institute for Policy Studies.
That means the richest 343,000 Americans control 5.5 times as much of the national wealth as the 172 million who make up the bottom half of the income distribution.
Put another way, the average person in the richest 0.1%, has as much money as 2,782 people in the bottom half.
As the labor and consumption of people in the bottom half make the rich ever richer, average Americans are burdened with growing costs for healthcare, childcare, groceries, housing, and now gasoline, according to various inflation measurements.
At least a majority of Americans in the bottom half is one $15,000 expense away from poverty, Dayton data analyst Eric Pachman has found.
New data confirm the economic trend in Ohio.
Columbus-based Scioto Analysis this month crunched 2023 census data to update a 2022 analysis it had done of 2018 data.
By some measures, there was improvement between 2018 and 2023 — a period that bookended the coronavirus pandemic and government programs aimed at propping up the economy by putting money in people’s pockets.
In 2018, the bottom 50% of Ohio earners got just 13% of total state income. By 2023, that figure had risen to 18%.
But by another measure of inequality, the Gini coefficient, things had gotten worse. Named for Italian statistician Corrado Gini, the system ranks inequality on a scale of zero to 100. Zero means that everybody has the same income and 100 means one person gets all the money — a state of perfect inequality.
In 2018, Ohio’s Gini coefficient was 45. Five years later, it had risen to 46.6.
By way of comparison, the national Gini coefficient in 2023 was 48.6. So Ohio is somewhat more equal than the United States as a whole.
To illustrate Ohio’s inequality, the latest Scioto Analysis report compared the federal poverty level to the wealth of the richest man in Ohio.
“In 2026, the federal poverty threshold for a family of four is $41,250,” it said. “Someone making a poverty wage would need to work about 225,000 years and not spend a dime over that period to accumulate a fortune the size of Les Wexner’s.”
In Ohio, 1.5 million people fell below the poverty threshold in 2023, according to the Ohio Housing Finance agency.
The level of inequality varies around the state, with it being greatest in the urban centers of Cleveland, Columbus, and Cincinnati, as well as in the Appalachian region of Southeast Ohio, the report said.
Members of some demographic groups are more likely to be nearer the bottom of the inequality curve, with minorities and young Ohioans being overrepresented.
“Income inequality in Ohio translates into housing inequality, where homeownership rates and housing-cost burdens vary sharply by demographic,” the report said.
“Housing-cost burden” refers to households that spend more than 30% of their income on housing. It is often expressed in terms of the share of a given group facing that situation.
“White Ohio residents have a 73% homeownership rate and a 21% rate of housing-cost burden,” the Scioto Analysis report said.
“In contrast, Black Ohio residents face a 37% homeownership rate and a 42% rate of housing-cost burden. Homeownership rates are highest among older and higher-income Ohioans, and housing cost burdens disproportionately affect younger and lower-income Ohioans.”
The report said that a negative income tax would be an effective tool for addressing Ohio’s inequality. Under such a system, the government would pay people falling below a certain income level.
However, Ohio’s Republican leadership did something to the contrary when it adopted the flat income tax that took effect this year. By passing it, “state legislators ensured that in 2026, Ohio’s millionaires will pay the same state income tax rate as public school teachers, child care workers, firefighters or any Ohioan with income over $26,050,” Policy Matters Ohio said earlier this year.
The Scioto Analysis report said the expected increase in inequality brought about by the flat tax can be measured.
“… Ohio is currently moving in a more regressive direction with recent changes to the tax structure,” it said. “The transition to a flat income tax structure in 2026 will eliminate most of the equality gains from Ohio’s 2023 income taxes, increasing the Gini coefficient back to 43.6. Reverting to Ohio’s more progressive 2003 income tax structure would lower the Gini Coefficient to 43.”
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Source: ohiocapitaljournal.com
Author: Marty Schladen
