Wednesday, June 21, 2006

Read, Weep -- Re Ohio's Tax Burden

In a misleading headline ("Think tanks take aim at Ohio's tax reform") that I believe is designed to make non-readers of the Columbus Business First article believe it is about TEL, The Buckeye Institute and The Tax Foundation criticize Ohio's 2005 "tax reform":

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The Buckeye Institute and a national anti-tax group are challenging last year's reform of Ohio's tax code, saying the changes are covering up continuing problems in the state's tax system.


The Buckeye Institute and the Washington, D.C.-based Tax Foundation, in a report on the state's economy, said lawmakers are using a 21 percent cut in personal income taxes over five years to cover up the state's continuing uncompetitive taxes on businesses compared to the rest of the country.

The reform package included a phasing out of the state's corporate franchise and inventory taxes in favor of a commercial activity tax on gross receipts. The report said that might actually hurt the state's competitiveness, however, because it could tax goods and services at several stages in the production process and because companies may owe taxes even when they're not profitable.

"Our economy is being held back because of our high taxes," said David J. Hansen, president of the Buckeye Institute. "Job creators are not coming to Ohio because we are uncompetitive."

Curtis Dubay, an economist for the Tax Foundation, said tax abatements offered to lure businesses to the state are proof that something is wrong with the system.

"State tax should be above board rather than in need of abatement," he said. "Offering abatements hurts existing companies, especially the smaller ones.

"The state should fix its tax system rather than give abatements," he said.

A Tax Foundation ranking of states' tax rates found Ohio had the third-highest tax burden in the country, behind Maine and New York. The April report said state and local taxes take up 12 percent of the income of the state's residents and businesses, compared with a national average of 10.6 percent.

..... Dubay said Ohio fared much better in the foundation's annual ranking back in 1970, when residents paid 8.1 percent of their incomes in taxes, placing the state at 47th in the country.

..... The full report is available online at www.taxfoundation.org/publications/show/1672.html.

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Also in the artilcle -- neighoring state, rank (x highest), burden:
Pennsylvania, 24, 10.4 percent
West Virginia, 21, 10.6 percent
Kentucky, 20, 10.7 percent.
Michigan, 16, 10.8 percent
Indiana, 12, 11 percent.

It's pretty clear that Ted Strickland doesn't think Ohio's 12% isn't even enough. Ken Blackwell will have his hands full keeping the burden where it is.

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