Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Journal Opinion
Taft Takes on the Tax CodeOhio manufacturers have long argued that the state's tax structure places an undue burden on them. Now momentum is growing to change the system, but those changes won't come without pain. They never do. Amending the tax code -- in particular, phasing out the tax on equipment and inventory and the state's corporate tax -- was a centerpiece of Gov. Bob Taft's State of the State address last week. Taft proposes replacing these levies with a more broadly based, lower tax on commercial activity. Lt. Gov. Bruce Johnson was in Youngstown last week, stumping for the governor's tax proposals during a visit to M-7 Technologies. As constituted, the state tax code is a "huge disincentive" for manufacturing investment, says Randy Leffler, spokesman for the Ohio Manufacturers Association, which last week launched a statewide radio campaign urging changes in how Ohioans are taxed. "That structure that was created in the 1930s is not serving the 2005 economy very well," Leffler states. Leffler sees a correlation between the tax code and the state having lost more than 200,000 manufacturing jobs since 2000. "The taxes that we have are underperforming and at the same time are a disincentive for companies to invest here," he says.While we are heartened to see the governor taking steps to address the state's job losses in manufacturing, we have to wonder where he's been since 1998, the year he was first elected chief executive. The plan Taft proposes won't come without sacrifice. Even with the new commercial activity tax, the state will take in $800 million less over the next two years than under the current system, and the state's coffers haven't been flush as evidenced by the Legislature raising the sales tax another percent -- "temporarily," of course. There will doubtless be opposition to the tax reform proposal by groups representing other business sectors -- such as service businesses -- that would face new taxes or tax increases to make up the difference. The lame-duck governor, in the final two years of his last term, has a narrow window of opportunity in which to push his agenda before state lawmakers turn their attention next year to re-election and who will succeed Taft. And if the state budget is going to be tighter as a result of a plan whose intent is making Ohio more competitive and encouraging growth, the sacrifices required should not be borne disproportionately by those least able to afford it.In addition, education -- the true key to the state's future -- should not be further shortchanged so manufacturers can enjoy lower taxes.At the very least, Taft's proposal provides a starting point for the state's leaders -- we'd like to think that means Republicans and Democrats working together -- to come up with a plan that fairly shares the tax burden and lays the groundwork for more growth. That alone is reason to be encouraged that attention is finally being paid to one of the problems plaguing the state's manufacturers. "