The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
In his biennial budget proposal, Ohio Gov. Mike DeWine wants to create a $1,000 per-child tax credit for middle and low-income families. In addition to benefiting the families themselves, it would produce nearly three-quarters of a billion dollars in annual benefit to the Ohio economy, according to an analysis released on Monday.
Families with children six and younger would be eligible. For couples filing jointly, benefits would begin to phase out at $75,000 a year in household earnings and stop altogether at $94,000. Those amounts would be lower for other filers.
DeWine proposes to cover the $450 million annual cost of the tax cut by increasing taxes on tobacco.
It’s thought that higher taxes reduce harmful habits like smoking. Meanwhile, the report by Scioto Analysis estimates that the tax credit will produce huge benefits for Ohio families and Ohio itself.
“There is a robust body of research that shows how investments made in early childhood are beneficial both to the families who receive them and the broader community,” Rob Moore, a principal with Scioto Analysis, said in a written statement. “Children who grow up with access to more resources have an easier time in the short term, which often translates to better wage, health, and criminal justice system involvement outcomes later in life.”
The analysis of DeWine’s proposal drew on one performed in 2022 by researchers at Columbia University. It estimated that increasing the federal child tax credit to $3,600 a year for kids 0-5 and $3,000 for those 6-17, “would cost $97 billion per year and generate social benefits of $929 billion per year.”
DeWine’s proposal is more modest, but the estimated benefits are still dramatic. The analysis tries to capture the different ways that the tax credit will boost future income and reduce social costs.
“Research has shown that these additional resources can lead to a wide range of benefits for the children and adults who receive them…” it said. “We measure the impact this additional income has on the future earnings of children, avoided expenditures on healthcare for both children and adults, avoided expenditures on child protection, and the avoided costs associated with reducing crime into the future.”
The biggest estimated benefit is $500 million a year in added future income, followed by $450 million in direct benefits to families, and $190 million in avoided costs associated with crime.
Moore, of Scioto Analysis, said DeWine’s proposal is smart money.
“Investing in Ohio children is a good bet for growing Ohio’s economy in the long run,” he said.
