Making Ohio Work for the Little GuyNov 07, 2017
Many local government officials in Ohio are among those from the 238 different cities waiting with baited breath to find out if their bid to secure the new Amazon headquarters has a shot. Indeed, Cincinnati may offer nearly $1 billion in tax breaks while Cleveland, though skittish about disclosing it’s offering, no doubt will pony up big breaks too, as will Columbus. However, something amid all this hype (and hyperventilation) is being lost, which is, most new jobs come from small business (those employing fewer than 50 people).
That’s right, most real job growth in Ohio’s economy is not going to come from a blockbuster deal with high-tech behemoths like Amazon or Facebook. Rather, it will come from new start-ups and small business. Several years ago, the Kaufmann Foundation concluded that between 1977 and 2005 existing U.S. firms sustained a net loss of jobs per year, while first year start-up businesses added an average of three million jobs annually. Most new businesses, of course, start small, which means that attracting new small businesses is vital to Ohio’s economic future.
Interestingly, as outlined in a new survey from Thumbtack.com, small business owners don’t want big targeted tax breaks. Rather, they want simplified regulations, better training programs, and easier to navigate government websites and bureaucracy. The survey found that business owners reported they spent more than 8.5 hours a year just trying to comply with government regulations and file all the needed paperwork.
While there were several positive comments in the Thumbtack survey that reflect some of the efforts government has made to be more business friendly, there can be no doubt there is room for improvement. Comments from those surveyed in Ohio highlight some of the frustration. For example, a life coach in Columbus said it was easier to start a business in Washington state than Ohio. An animal trainer in Granville summed it up very well:
“Ohio, on one level is a business-friendly state, but for very small businesses such as mine, it can be very difficult navigating the labyrinth of taxes, registrations, and all the regulations and compliance issues.”
Herein lies the problem. Ohio does well for medium and big businesses, but more must be done for the little guy.
The Buckeye Institute has pointed out several areas for improvement:
- Fixing Ohio’s absurdly complex municipal income tax;
- Making state taxation simpler;
- Reforming local government to become more efficient; and
- Reform Ohio’s burdensome occupational licensing system.
Naturally, this is just a start. But these are the policies that will keep Ohio moving forward and will have a more beneficial impact than lavishing incentives on the trendy companies. Furthermore, at a time when many Ohioans feel left out of the new economy, showing them that Ohio’s leaders really are looking out for them is much more than just a political gesture, it is the key to showing them they are just as important as the head honchos of Silicon Valley.
Greg R. Lawson is the research fellow at The Buckeye Institute.