Ohio's flat tax: A gift to billionaires at the expense of workers

Hannah Halbert, Executive Director of Policy Matters Ohio, joined the America's Work Force Union Podcast to discuss Ohio's new flat tax, its impact on public services and the future of state funding. Halbert highlighted how the flat tax disproportionately benefits the wealthy, explained its negative impact on education funding and warned about potential long-term consequences for Ohio's budget.

Halbret claimed Ohio's new flat tax, which was signed into law as part of the state's biennial budget, will result in $1.1 billion in lost revenue. She explained that 96 percent of the tax cuts will benefit households earning over $138,000 annually, with the top 1 percent receiving an average cut of $6,500. She said this shift in tax policy will effectively force lower-income Ohioans to pay the same rate as billionaires, leading to significant cuts in essential services like education, childcare and food assistance programs.

The state’s new budget upended years of bipartisan work on a fair, cost-based formula for education funding. Halbert noted that wealthy school districts are now receiving more funding than poorer ones, with major urban districts facing cuts compared to 2025 levels. This redistribution, she said, coupled with increased spending on private school vouchers, threatens to exacerbate educational inequalities across the state and undermine public education.

Looking ahead, Halbert warned that Ohio might face severe budget shortfalls similar to those experienced by states like Kansas, which was forced to close schools due to drastic tax cuts. With Ohio already losing nearly $13 billion annually from previous tax cuts, she thinks the new flat tax could push the state toward a fiscal crisis, potentially leading to further cuts in essential services or increases in regressive taxes like sales tax.

To learn more about Ohio's flat tax and its implications, listen to the above episode.