The document proposes a negative income tax as the most effective way to level the playing field for Ohio workers.

COLUMBUS, Ohio — Ohio’s income inequality has been on the rise for the past 50 years, with the top 1% earning 10% of the total in 2018 a new analysis.

Compare that to the lowest-earning 50% of Ohioans. Collectively, they earned slightly more than this tiny, high-paid portion of the labor force — 13%, according to a report released Monday by Scioto Analysis.

The document proposes a negative income tax as the most effective way to level the playing field for Ohio workers.

The Buckeye State is part of a broader national trend that dates back to the late 1970s, in which the incomes of the top 5 percent of households have grown much faster than their middle- and lower-income counterparts. Now a much larger share of the money is reaped by those who earn well.

Since 1980, the share of national income earned by the top 1% and the bottom half has “completely reversed,” according to a report by Nitya Nagaratinam, Julia Rosales and Diego Villegas, all graduate students at the University of California, Berkeley. “Forty years ago, the top 1% of the income distribution earned 10% of national income, but now they hold 20%. On the other hand, the low-wage 50% of the population has shrunk from 20% of national income…to about 13% today.”

When it comes to income inequality, Ohio is slightly better than average. In 2018, it ranked 29th, with the top 1% of earners earning an average of $859,000 a year, while everyone else earned an average of $46,000. Institute of Economic Policy.

Those levels of inequality are bad for the state, according to the Scioto Analysis report.

“Income inequality is a concern in Ohio, given the documented evidence that increased income inequality is associated with lower rates of intergenerational economic mobility, poorer health and well-being, higher crime and lower economic growth,” the report said.

Perhaps unsurprisingly, race, education level and geography are factors in Ohio’s income inequality, the report found.

“On average by race and ethnicity, people with a high school diploma earn $11,858 more than those without a high school diploma,” the report said. “On the other hand, people with a college degree earn about $27,293 more than people with a high school diploma, on average across all racial and ethnic groups.”

Even when education levels are taken into account, black and Latino Ohioans earn significantly less than their white counterparts, and the highest levels of income inequality exist in the state’s largest urban centers, an analysis of U.S. Census data shows.

So what can be done to address such huge and growing inequality? The researchers analyzed several approaches.

One simple step would be to raise the minimum wage. In 2018, the year for which earnings data was analyzed, the minimum wage was $8.30 an hour. It has since been raised to $9.30, but that’s the same purchasing power as the minimum wage of $1.25 an hour in 1970.

Meanwhile, state data shows that none of the 10 occupations that need the most workers pay an average of $15 an hour. Raising the minimum wage to such a high level would do about as much to reduce income inequality as increasing government benefits under the Earned Income Tax Credit, the report said.

A much larger reduction in inequality would result from creating a “negative income tax” that would pay Ohioans based on how much their incomes fall below 150% of the federal poverty level, the report said.

“Traditional tools like income tax credits and raising the minimum wage can reduce inequality, but according to our simulations, a negative income tax would have three times the impact of any of these measures,” Scioto said in a statement. Analysis by Rob Moore.

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