Bob Patterson, Concord Resident

Licensed Financial Adviser (Series 65)

To my fellow Ohio property tax payers, here is a plan that we should demand our representatives in Columbus implement to COMPLETELY ELIMINATE property taxes!

As a licensed Financial Adviser (Series 65), I think this is doable. But admittedly it will be a lot of work for our representatives in Columbus. They will have to have a lot of preservice to get it done! Or maybe a slight push from property tax payers would help (the ballot initiative next year).

In the 2024 tax year, Ohio’s property tax revenue was about $23.9 billion. This significant amount supported essential services like schools, libraries, and community colleges. Interestingly, this revenue was significantly higher than the state’s sales tax and income tax revenues combined for that same year. policymattersohio.org

Ohio’s Property Tax Landscape

Kiplinger
Ohio Tax Guide 2025
Jun 30, 2025

Okay, now let’s forward the proposition that this tax revenue is eliminated. What areas would Ohio have to go to for replacing the $23.9 billion of taxes?

If Ohio were to eliminate that property tax revenue, it would need to find alternative funding sources to maintain public services. Some potential options could include:

1. Increased Sales Taxes: Raising the state’s sales tax rate could help offset the lost revenue, though it might impact consumers more directly.
   
2. Higher Income Taxes: Increasing personal or corporate income tax rates could be another approach, though it might have economic implications.
   
3. Expanding Other Taxes: This could include increasing taxes on businesses, or introducing new taxes like a higher gas tax.
   
4. Federal Funding or Grants: Ohio could seek increased federal support or grants to compensate for the lost revenue, although that may not be a stable, long-term solution.
   
5. Cutting Public Services: While not a direct replacement, Ohio could also consider reducing the scope of certain public services to balance the budget, though that might not be ideal.

Ultimately, a combination of these approaches would likely be needed to fully compensate for the loss of property tax revenue.

Okay, then let’s put together a scenario where that’s done. How much would sales taxes have to increase?

To get a rough idea, we can break it down. For example, Ohio’s total sales tax revenue in recent years has been around $10 to $12 billion annually. If we needed to replace the entire $23.9 billion from property taxes solely with sales tax, we’d need to increase the sales tax by roughly double.

So, if the current sales tax rate is about 5.75%, and it generates around $11 billion, then to hit $23.9 billion, you’d need a rate of roughly 11.5% to 12% in total.

Of course, this is a simplified calculation, and the actual impact would depend on the consumption patterns and the elasticity of demand, but that gives a ballpark figure!

However, let’s not just pick sales tax as the one outlet. Let’s smooth the increase over the other suggested areas.

That makes sense! If we spread the burden across multiple revenue streams, it can be more balanced and less impactful on any single area. For example:

1. Sales Tax Increase: Instead of doubling it, maybe we raise it modestly, say from 5.75% to around 7.5%, which could generate a few billion more.
   
2. Income Tax Increase: A modest increase in the top income tax brackets could contribute several billion dollars without placing too heavy a burden on lower-income residents.
   
3. Business Taxes: Slightly increasing corporate taxes or introducing new business-related fees could generate additional revenue, perhaps a few billion more.
   
4. Federal Grants and Funds: Increasing the pursuit of federal grants could help cover some of the gaps, adding another couple of billion.
   
5. Other Taxes: Higher gas tax could contribute smaller, but still meaningful, amounts.

By spreading out the increases across these different revenue sources, it makes the impact more manageable and avoids overburdening any single group. It’s definitely a more balanced approach! What a HUGE benefit to homeowners who are sometimes forced to move and downsize because of continually increasing property
taxes!

Creating a Department of Government Efficiency could potentially streamline operations, reduce waste, and lower overall costs. The savings could come from various areas, like optimizing procurement, improving technology, reducing redundancy, and enhancing workforce productivity.

If, for instance, the state could achieve even a modest 5% reduction in overall government spending, that might translate to billions in savings annually. These savings could help offset the need for higher taxes or at least reduce the pressure on taxpayers.

So, it’s definitely a strategic way to help balance the budget and maintain essential services.

All in all, what would the dollar value of each of these strategies amount to?

To put some rough numbers to it, let’s break it down a bit further:

1. Sales Tax Increase: If we increase the sales tax from about 5.75% to 7.5%, that could generate an additional roughly $5 billion to $6 billion annually.
   
2. Income Tax Increase: A modest increase in the top brackets might bring in around $3 billion to $4 billion more per year, depending on the exact rate and brackets.
   
3. Business Taxes: Adjusting corporate taxes or adding new business fees could potentially raise around $2 billion to $3 billion annually.
   
4. Federal Grants and Funds: While variable, increasing federal funding could contribute maybe another $1 billion to $2 billion annually, depending on the grants pursued.
   
5. Government Efficiency: If the new department achieves even a 5% reduction in the state budget, and Ohio’s budget is around $70 billion, that could mean roughly $3.5 billion in savings per year.

When you combine all of these strategies, you could potentially save or generate upwards of $18.5 billion or more annually. Of course, the exact figures would depend on implementation details and how effectively each strategy is carried out, but that’s a ballpark estimate!

But we have to generate $23.9 billion.
If the goal is to cover the entire $23.9 billion gap, then we’d need to scale up or combine these strategies more effectively. For instance:

 Sales Tax: We might raise it a bit more, maybe up to around 9% or even 10%, which could generate closer to $10 billion or more.

 Income Tax: Increasing the rates more significantly could add another $5 billion to $6 billion, depending on how far we adjust the brackets.

 Business Taxes: A more substantial increase here could contribute another few billion, say $3 billion to $4 billion.

 Government Efficiency: If we aim for a higher percentage of savings, let’s say 7% to 10% of the budget, that could bring in even more substantial savings, maybe up to $5 billion or more.

 Federal Grants and Other Taxes: Combining these, we could push another $2 billion to $3 billion in additional revenue.

In total, by blending all these strategies and potentially scaling them, we could feasibly reach that $23.9 billion mark. It’s definitely about finding the right balance and ensuring that each source contributes a portion of the total needed.

One area, for example, in the Business Tax category the commercial activity tax? That’s a very low percent.”

The Commercial Activity Tax (CAT) in Ohio is indeed relatively low, and it’s based on gross receipts. It’s currently around 0.26% on gross receipts over a certain threshold.

If we consider increasing the CAT rate, even modestly, it could generate additional revenue. For example, if we raised it from 0.26% to around 0.5% or 0.75%, it could bring in an additional few billion dollars, depending on the overall volume of business activity in the state.

So, yes, including the CAT and adjusting it could be a meaningful part of the overall strategy to help reach that $29 billion target. It’s definitely another lever that Ohio could pull to balance the budget.

Think of the overall benefit to home owners and the amount of money they will save not paying any property taxes. In my personal case that amounts to over $12,000 a year!!! How would you be affected?

Bob Patterson
Former Concord Township Trustee
440-221-1114

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Categories: Community Activism, Lake, Real Estate Taxes

Tags: FT, Property Tax