Under Gov. John Kasich’s budget proposal, "the top one percent in Ohio will pay $10,000 less in income tax each year, but Ohio’s working and middle class families will pay more."

Dan Ramos on Tuesday, February 19th, 2013 in a news release

State Rep. Dan Ramos says top earners would pay less and middle-class families would pay more under governor’s budget proposal

Gov. John Kasich’s proposed tax overhaul would affect the pocketbooks of all Ohioans – whether for good or for ill is a source of disagreement among state lawmakers.

The Republican governor’s plan aims to reduce income taxes for all Ohioans by 20 percent, shave down sales tax to 5 percent while broadening the sales-tax base to include previously tax-exempt services, and slash in half taxes on most small-business income. Kasich also wants to reform oil and gas severance taxes.

The tax plan is drummed up by Kasich’s administration as a victory for all Ohio taxpayers. But Rep. Dan Ramos, a Lorain Democrat, is among those who liken the budget proposal to a shell game only Ohio’s upper crust can win.

"Under [Kasich’s] plan, the top one percent in Ohio will pay $10,000 less in income tax each year, but Ohio’s working and middle class families will pay more," Ramos said Feb. 19 in a written statement.

PolitiFact Ohio decided to audit the representative’s numbers.

Ramos’ office said the assertion draws from a study released by left-leaning think tank Policy Matters Ohio, which cites calculations by the Washington-based Institute on Taxation and Economic Policy.

The numbers released in February by ITEP show that the top one percent of Ohio taxpayers, with a mean income above $335,000, would save an average of $10,369 each year. Ohioans earning less than $18,000 would, on average, pay an additional $63 in taxes.

ITEP further asserts that Kasich’s proposed tax reform would typically result in a net loss for Ohioans making up to $51,000 each year.

But how did ITEP get its numbers?

The non-profit said it uses an elaborate microsimulation tax model that calculates the impact of changes to current tax law at the federal and state level.  Among the stratified data used in the model are a large sample of federal tax returns, Bureau of Labor Statistics Consumer Expenditure Surveys and Census Bureau American Community Surveys, they said.

The New York Times has lauded the credibility of the model and Bloomberg has used the model’s calculations as reporting tools.

For Ohio, ITEP factored Kasich’s proposed tax revamps – minus his severance tax plan – into its calculations and delivered its findings to Policy Matters Ohio.

That’s where Ramos picked up the figures and used them in his argument that Kasich’s plan would "shift the burden of taxes from the shoulders of those who have to the shoulders of those who have not." And Ramos is mostly correct.

The numbers are credible, but Ramos’s statement implies that every working and middle-class family would pay more under the reform.

According to the ITEP numbers, 20 percent of Ohioans earn between $51,000 and $78,000 per year, and would begin to see an average yearly savings of about $75. The line between middle- and upper-class incomes is up for debate – not one to be defined absolutely by PolitiFact Ohio – but it’s safe to say that a yearly income of $51,000 is a far cry from upper-class.    

Ramos was correct in describing the tax benefit to Ohioans with the highest incomes, but he wrongly implied that all working and middle-class families would take a hit under Kasich’s plan. For that, we rate his statement Half True.