Friday, February 06, 2015YOUNGSTOWN, Ohio – Sherry Treharn, CEO, of JL Treharn & Co., says Gov. John Kasich's proposal to eliminate the state income tax on some small businesses would enable her company to reinvest in its operations and add employees -- something the furniture maker hasn't done in a while.
"It is helping us to at least consider for the first time in a very long time making some purchases towards improving our equipment, and hopefully long-term, making some changes that will give us better footing in the marketplace, which will help us hire more," Treharn said Thursday
JL Treharn played host to Lt. Gov. Mary Taylor yesterday as she toured the company's workshop and met with Treharn and her father, Terry Treharn.
The company, on the ground floor of the Ward Bakery Building, 1024 Mahoning Ave., manufactures reproduction antique furniture, a market in decline for several years, Treharn said.
The company is fortunate to be among just eight or so left in the country that perform this work and manufacture these products. "It's made the same way it was made hundreds of years ago, using techniques perfected by American craftsmen,” Treharn related.
Meeting with reporters following her tour, Taylor told them that companies such as Treharn serve as an example of how the governor's tax proposal could help these companies expand their operations and create jobs.
"The income tax tends to be the tax that's most devastating to economic recovery," she said. "The governor and I feel very strongly about giving businesses like Treharn the opportunity to be successful, stay in Ohio and grow right here."
Kasich wants to exempt businesses that have annual revenues of $2 million or less from paying income taxes as part of his two-year $72.3 billion budget proposal.
In that budget are measures to offset that loss of revenue, such as $2.48 billion increase over two years of the state sales tax, rising to 6.25% from 5.75%. Kasich’s proposal also calls for tax hikes on larger corporations, a $1 per pack increase in the cigarette tax, reduced tax breaks for those who trade in used vehicles, and an increase of the state's oil and gas severance tax.
"All taxes are bad," Taylor posited. "But there are some taxes that are worse than others."
She said that shifting to a more consumer-based tax and increasing taxes on larger companies is a tradeoff that makes sense for the state because small businesses are an integral part of Ohio's economy.
"We support our small businesses. They're the drivers of our economy," Taylor said. "It's important to reinforce their needs and give them the opportunity to put more money back in their pocket."
Kasich also proposes an increase in the severance tax that energy companies pay on the quantities of oil and gas they obtain from the Utica shale in Ohio. Companies currently pay three cents per thousand cubic feet of dry gas and natural-gas liquids and 20 cents per barrel of oil extracted.
Kasich’s plan would increase the rate of oil and gas produced from unconventional wells to 6.5%, with another 4.5% on natural gas and natural gas-liquids processed through cryogenic and fractionation plants.
Those in the industry have voiced concerns that an increase of this magnitude could harm businesses and workers related to shale development in Ohio, especially when energy companies and their suppliers are slashing budgets and suspending operations.
"With a 60% decline in oil and natural gas prices over the last year due to global and external factors, we simply cannot afford a tax policy that would discourage operators from investing in our state and instead move their capital to more profitable shale plays," the Ohio Oil and Gas Association said in a statement.
The recent plunge in energy prices has forced companies to pull back from drilling operations in the Utica, affecting the supply chain. On Wednesday, Vallourec Star, which produces drill pipe and casing for the industry, announced it would shut down its Youngstown operations for three weeks in the wake of slackening demand.
"At the end of the day, the natural resources in the ground underneath Ohio obviously presents an opportunity that doesn't exist in a state that doesn't have those same natural resources," Taylor said. "Even with the latest proposal, the tax rate is very low" compared to states such as Alaska.
Plus, she said, a portion of the funds raised through this tax would be earmarked to help communities maintain and rebuild infrastructure affected by shale development.
An attempt to raise the severance tax to 2.75% two years ago failed in the General Assembly, which proposed a compromise rate of 2.5%.
Whether Kasich's latest proposal has a chance this year remains to be seen, Taylor said. "One thing I will never do is predict what the General Assembly will do," she remarked. "If they have better ideas or better proposals, we want to hear from them."
Pictured: Sherry Treharn, Lt. Gov. Mary Taylor and Terry Treharn.
Copyright 2015 The Business Journal, Youngstown, Ohio.
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