Thomas M. Zaino, JD, CPA – Managing Member
Chamber's Blueprint for Ohio's Economic Future Calls for Comprehensive Tax Reform
The Ohio Chamber of Commerce issued a comprehensive report entitled “Blueprint for Ohio’s Economic Future” (“Blueprint”) which focuses on key areas for growth and improvement for Ohio. The Chamber intends to use the report over the next ten years to drive policy improvements to increase Ohio’s economic growth. The Ohio Chamber of Commerce Research Foundation commissioned the report with Accenture to conduct an analysis of economic rankings of Ohio and other states. (Tom Zaino of our Firm serves on the Executive Committee of the Ohio Chamber of Commerce and is Treasurer of the Chamber’s Research Foundation.)
The Blueprint lists six “levers” or areas that are important to improve Ohio’s competitiveness in a global business environment, including:
1. Education & Workforce
2. Taxes & Costs
3. Business Friendliness
4. Sense of Place
5. Innovation & Collaboration
For each lever, the Blueprint highlights areas on which Ohio should focus over the next decade to improve economically.
Taxes & Costs. The Blueprint highlights that Ohio ranks 37th in the country for low tax burden, putting Ohio in the back of the pack. The report refers to the Council on State Taxation’s (COST) October 2021 analysis that places Ohio below the national average for the total tax burden. Other notable comments in the report include the following:
Ohio is one of only seven states that still impose a broad gross receipts tax (the CAT), which impacts firm with low-profit margins and high production volumes;
Ohio government relies most heavily on sales and use taxes for revenue, followed by income taxes;
Ohio has the second highest number of local tax jurisdictions (848), exceeded only by Pennsylvania (with 2,978); and
Ohio real property tax ranks as 13th highest in the country.
To address Ohio’s tax competitiveness, the Blueprint makes three major recommendations:
1. Target comprehensive tax reform. The Blueprint notes that the last comprehensive review of Ohio’s tax system occurred nearly 20 years ago by the Committee to Study State and Local Taxes. The Chamber’s report recommends that policymakers conduct a renewed examination of these policies to ensure a quality tax system for Ohioans. It also suggests that Ohio perform a review of tax incentives and analyze any proposed tax law changes to consider the impact on services that benefit businesses and communities, such as education, public safety, and infrastructure.
2. Improve municipal income tax complexity and burden. Noting that Ohio has over 800 local taxing jurisdictions, the report emphasizes the costs to businesses and Ohioans for complying with such a broad and complex system of local taxation. The Blueprint calls for uniformity in tax rates and filing requirements, addressing the burden of withholding on wages of employees working in multiple jurisdictions, and ensuring that any reforms provide adequate funding for municipal operations.
3. Conduct further analysis on the Ohio business gateway’s impact on businesses. For the Tax and Cost lever, the report finally calls for further analysis of the Ohio Business Gateway in an effort to further relieve the administrative burden of taxes, licenses and fees on businesses.
The other five levers are also important components to increasing Ohio’s overall economic competitiveness. Those interested in learning more about the other five levers can see this ZHF Consulting Buzz for more details. The Ohio Chamber of Commerce will be working with policymakers over the coming years to press them on the Blueprint’s recommendations. It has begun this process by holding meetings to discuss the Blueprint across Ohio and will continue to do so over the next several months.
If you or your company would like to discuss the potential impacts the Blueprint may have on your business, please contact one of our professionals.