$2.5 Billion Saved by Ohio Businesses
Ohio businesses now pay no taxes on capital for new machinery, equipment, furniture, or fixtures. Dr. Howard Fleeter, a partner in the economic analysis and public policy research firm of Driscoll & Fleeter, based in Columbus, estimates that the elimination of the corporation franchise tax and the tangible property tax has resulted in a reduction of $2.5 billion in taxes for Ohio businesses to date. This savings could be used to invest directly into equipment, inventory, and personnel to drive future growth and boost businesses' bottom lines.
The corporation franchise tax and tangible property tax were replaced by a new Commercial Activity Tax (CAT), which is a business privilege tax measured by gross receipts. While gross receipts taxes are often burdensome on businesses in general, the Ohio CAT, like other aspects of the state's business tax reform, was designed with the needs of business in mind.
'The Ohio CAT has a uniquely low tax rate, just 0.26%, and it is not imposed on any sales exported out of Ohio,' Zaino explains. 'As a result, new investments in Ohio are not penalized by the CAT. In fact, it generally makes it more cost-effective for businesses to relocate to Ohio rather than to other states. If a business were to ship 100% of its sales out of Ohio, it would pay zero CAT. As a result, Ohio is very attractive to companies that will export their goods out of Ohio or out of the country.'
