February 9, 2009
Toledo Blade Interviews Staff Economist Josh Barro on Tax Reform in Ohio
"Tax Reform's Full Effects Not Yet Felt"
By Jim Provance
But the Tax Foundation, a nonprofit also based in Washington, looked beyond just the numbers and decided it doesn't like how Ohio applies its business and personal income taxes, although the lowered rates certainly help.
The foundation is a fan of simpler taxes, so its scoring system punishes Ohio for its nine personal income tax brackets. It also doesn't like that the business gross-receipts tax retaxes the same dollar on a product as it moves through the supplier-manufacturer-wholesaler-retailer chain on its way to consumers.
In its 2008 study, which also considered local property tax burden and local sales tax add-ons, the foundation ranked Ohio 47th in business-friendliness.
That means it considers only three other states to be less friendly to business than Ohio. Michigan ranked 20th.
Although Ohio's overall score has improved year to year since the reforms were started, the study author said he doesn't anticipate Ohio moving out of the bottom 10 anytime soon.
"It's a marginal improvement in Ohio's tax code which will have a marginally positive effect on growth," said Josh Barro, staff economist. "But it's not what they were looking forward to in terms of changing perception of Ohio and changing the comparisons with neighboring states."
