(THE CENTER SQUARE) – Ohio has one of the worst business tax climates in the country, according to a report released by the Tax Foundation.
The State Business Tax Climate Index, developed for taxpayers to gauge how state tax systems compare, ranks corporate, individual, sales, property and unemployment insurance taxes to rank each state overall.
Ohio ranked 37th overall, below each of its five neighboring states and in the same position it did a year ago.
Indiana ranked ninth in the country for its business tax climate, while Michigan was 12th, Kentucky 18th, West Virginia 20th and Pennsylvania 33rd.
Ohio’s best ranking came in the area of property tax (sixth), while the worst was individual taxes (41st). Other rankings included corporate taxes (39th), sales taxes (36th) and unemployment insurance taxes (13th).
“Ohio's tax competitiveness continues to be hampered by the Commercial Activities Tax, which negatively affects the state's corporate and individual income tax rankings," analysts wrote in the report.
"The individual income tax ranking is also hurt by the state's marriage penalty and the width and number of marginal tax brackets it employs,” said Timothy Vermeer, senior state tax policy analyst for the Tax Foundation. “Ohio’s best scores are in the property and unemployment insurance tax categories. This is due in large part to the state's exemption of tangible personal property from taxation and its neutral treatment of unemployment insurance benefits.”
As previously reported by The Center Square, the Ohio Chamber of Commerce recently released a policy document it plans to use to lobby for issues it believes will drive economic growth in the state.
That document, “The Blueprint for Ohio’s Economic Future,” focused on six key areas, including taxes.
That report called for comprehensive tax reform, along with improving municipal tax complexity and burden. The chamber wants a review of state and local tax liabilities for businesses and uniformity of tax rates and filing requirements for municipal taxes.
“With over 800 local taxing jurisdictions, Ohio’s businesses struggle to navigate a complex and burdensome municipal tax code. Differing definitions of income, variable rates, and onerous filing systems reduce productivity and increase costs. Policymakers should support efforts to standardize filing requirements and rates while improving processes to reduce compliance burdens,” the chamber policy document reads.
According to the Tax Foundation’s report, the states in the bottom 10 have several issues in common – complex, non-neutral taxes with relatively high rates.
The 10 best states in this year’s index include Wyoming, South Dakota, Alaska, Florida, Montana, New Hampshire, Nevada, Utah, Indiana and North Carolina.
The 10 worst include New Jersey, New York, California, Connecticut, Maryland, Minnesota, Vermont, Hawaii, Rhode Island and Alabama.
