Report: Ramaswamy tax plan would gut Ohio schools, Medicaid

A policy report released Monday by Innovation Ohio concludes that GOP gubernatorial candidate Vivek Ramaswamy’s proposal to eliminate Ohio’s personal income tax would create a $9.8 billion annual gap in the state budget, threatening deep cuts to public schools, Medicaid, and local government services.

The report, published in February 2026, draws on data from the Ohio Legislative Services Commission, the Thomas Fordham Institute, the Kaiser Family Foundation, and the Center for Community Solutions.

Ohio’s personal income tax is projected to generate $9.82 billion in fiscal year 2027, representing 21% of the state’s General Revenue Fund and 33% of all state-source tax revenue, according to the Ohio Legislative Services Commission’s Budget in Brief. The General Revenue Fund finances K–12 education, Medicaid, public universities, human services, and the state’s criminal justice system.

Ramaswamy has argued that eliminating the income tax would attract and retain wealthy residents — particularly those who currently split time between Ohio and lower-tax states like Florida or Texas — and projected the policy could grow Ohio’s population from approximately 11 million to as many as 15 million residents. Innovation Ohio’s report disputes whether growth at that scale is plausible, noting that Ohio has not experienced sustained revenue expansion of that magnitude in modern budget history outside of temporary post-recession rebounds.

Schools

K–12 education receives $12.0 billion from the General Revenue Fund each year. If spending were reduced proportionally to offset the lost income tax revenue, public schools would face a $2.44 billion cut — equal to approximately 21% of all state support for schools, according to the Thomas Fordham Institute’s “Ohio Education by the Numbers” data for the 2023–24 school year.

To replace that loss through local property taxes alone, collections would need to increase by approximately 20% statewide. The report states that cuts of that magnitude could not be absorbed without consequences including larger class sizes, reduced services for students with disabilities, fewer bus routes, and diminished access to meals.

Medicaid

Medicaid is the largest single program in Ohio’s budget, covering approximately 3 million Ohioans, according to the Center for Community Solutions. The state-funded share of the program totals roughly $8.0 billion per year. The report notes that the proposed $9.8 billion revenue loss would exceed the entire state-funded share of Medicaid.

Because Medicaid is jointly funded with the federal government, state-level reductions also reduce federal matching dollars. According to the Kaiser Family Foundation, each $1 in Ohio state Medicaid spending draws down roughly $1.87 in federal support, amplifying the effect of any state-level cuts.

Who pays

For a typical full-time Ohio worker earning $60,000 annually, eliminating the income tax would reduce their tax bill by approximately $100 per month, based on rates published by the Ohio Department of Taxation. The report argues the financial benefit would flow disproportionately to high-income earners and those selling businesses or appreciated assets — transactions most wage earners do not make.

Replacing the $9.8 billion in lost revenue would require some combination of deep spending cuts, higher property taxes, or greater reliance on the sales tax. If the lost revenue were replaced entirely through the sales tax, statewide collections would need to increase by approximately 65%.

The Kansas comparison

Innovation Ohio’s report draws on the experience of Kansas, which enacted aggressive income tax cuts beginning in 2012 with an eventual goal of eliminating the tax. Between 2012 and 2017, Kansas population growth reached just 1.2%, compared with 3.9% nationally, according to U.S. Census Bureau data. Private-sector job growth lagged the national average and trailed several neighboring states. Repeated budget shortfalls led to education funding reductions, transfers from highway funds, delayed pension payments, and multiple credit rating downgrades. In 2017, a Republican-led legislature substantially reversed the cuts, citing fiscal instability, according to analyses from the Center on Budget and Policy Priorities and the Brookings Institution.

“Vivek Ramaswamy’s plan is simple: cut taxes for wealthy people like him, while gutting schools, cutting healthcare, and raising taxes on the rest of us,” said Innovation Ohio President Michael McGovern. “Ohio families once again get screwed while rich Wall Street vultures like Vivek Ramaswamy get another tax handout.”

The full Innovation Ohio report is available at innovationohio.org.