Ohio Businesses Bear The Majority of Recent Tax Increases

By , posted February 6, 2004

As Ohio policymakers try to stem the tide of job losses and turn the state's economy around the detrimental impact of high taxes should be considered. A recent study performed by Ernst and Young for The Council on State Taxation shows exactly how tax increases over the past three years break down. The numbers do not give the impression of Ohio as a business-friendly and growth-oriented state. [1]

Shifting the tax burden

In 2003, Ohio's total state and local taxes amounted to $37 billion. This total includes an increase of $1.8 billion in the last three years. For businesses, such growth has been particularly burdensome. Of the total increase, business paid $1,098.2 million, or 59.7 percent. [2]

That businesses have borne the majority of Ohio's large tax increases should be a cause of concern for those seeking economic recovery in the state. The economic hardship of taxes imposed on businesses ultimately fall on the individual citizens of Ohio - whether indirectly in the form of reduced wages and higher prices, or directly when firms shut down, move to more competitive states, or never open to begin with.

Turning a corner

In 2002, the Federation for Community Planning released a study detailing what was then a very different story - the declining share of taxes paid by the business sector. State policy has since shifted considerably. While the FCP study relied on numbers from the nineties and earlier, the Ernst and Young study focuses on more recent trends from within the last three fiscal years only. [3]

Footnotes:

[1] Robert Cline, William Fox, Tom Neubig and Andrew Phillips, Total State and Local Business Taxes: A 50-State Study of the Taxes Paid by Business in FY2003 (New York, NY: Ernst & Young, January 2004). Available at: http://www.statetax.org/.

[2] Ibid.

[3] It is worth noting that there are also some differences in how each analysis apportions income between consumers and businesses. For more information, see Edward W. Hill and Billie K. Geyer, "Business Climate, Business Taxes, and Economic Development," Taxing Issues (Cleveland, OH: The Federation for Community Planning, October 2002). Available at: http://www.fcp.org/