WASHINGTON, D.C. — A recent study predicts federal and state policies will worsen income inequality in Ohio.
What You Need To Know
- A recent study predicts recent policy changes at both the federal and state level could increase inequality in the future in Ohio
- Ohio’s Gini coefficient of 46.6 is slightly lower that the national average of 48.6, calculated on data from the American Community Survey
- The study advocates for a number of measures to address income inequality, such as a negative income tax
The study, conducted by Columbus-based research firm Scioto Analysis, determined that Ohio’s Gini coefficient is 46.6.
The Gini coefficient is the most widely used measure of economic inequality. Named after Italian statistician Corrado Gini, who developed the metric in 1912, it scores a society’s income distribution on a scale of zero to one. A score of zero represents perfect equality, in which everyone earns the same amount, while a score of one represents perfect inequality, in which one person earns all the money.
The study found that the top 10% of Ohio earners bring home 33.7% of all income in the state, while the bottom 50% share just 18.3%. That means an Ohio family at the bottom 10th percentile of income, earning $15,500 annually according to data from the Bureau of Labor Statistics, would need to work 15.6 years to earn the $242,410 that a family at the top 10th percentile of income earns in one year.
The study lays out the real-world impact of inequality on rates of homeownership, housing cost burden and levels of retirement and emergency savings.
Rob Moore, principal at Scioto Analysis, added that inequality also has unseen costs.
“ZIP codes that have higher levels of income actually have more patents that happen,” Moore said. “There are some people who have done some analysis to say that if there wasn’t so much poverty in certain pockets of the U.S. population, that we’d probably have more innovation and more inventions that would be happening.”
Ohio’s Gini coefficient of 46.6 is slightly lower that the national average of 48.6, calculated on data from the American Community Survey.
The World Bank considers any country with a number over 40 to have high inequality. According to its data, the U.S. has a Gini coefficient of 41.3, which remains the highest among G7 countries and the fourth highest among all high-income countries.
However, the study says that recent policy changes at both the federal and state level could increase inequality in the future in Ohio.
The state this year implemented a change from a progressive state tax system to a flat income tax rate of 2.75% for nearly all earners, meaning every earner making more than $26,050 will pay the same state tax.
The tax impact is compounded by changes at the federal level. President Donald Trump’s sweeping tax and spending measure that he signed into law last year, known as the Big Beautiful Bill Act, couples lower taxes for some ultra-high earners with cuts to federal aid programs such as the Supplemental Nutrition Assistance Program.
“It’s not shocking when you have something like the one Big, Beautiful Bill that has billions of dollars of tax credits and relief for billionaires, but individuals are still having to scrape by and make ends meet,” said Rep. Emilia Sykes, D-Ohio.
The study advocates for a number of measures to address income inequality, chiefly a negative income tax. First popularized as a concept by economist Milton Friedman in the 1960s, a negative income tax is a system people who earn below a certain income threshold receive payments from the government rather than pay it taxes. The system incentivizes work by tapering off payments as income rises.
The U.S. has never fully adopted the concept, but it influenced the creation of the Earned Income Tax Credit, which provides billions of dollars to low-income workers. However, adoption on a wider scale remains politically controversial and would be difficult to enact into law.