Ohio’s Tax Policy About Results, Not Philosophies

Wednesday, June 19, 2019

Doing what actually works, not what is assumed to work

Ohio’s economic and business climate continues to receive national attention. For example, Ohio has been ranked top 10 in Chief Executive’s Annual CEO Survey of Best States for Business in each of the past two years. Yet, depending on the source, the growth and success of the state is up for debate. On Sept. 28, 2018, the Tax Foundation’s 2019 State Business Tax Climate Index ranked Ohio 42nd for the structure and complexity of its tax system. While this would appear to put Ohio in a negative light, it’s time to set the record straight and tell the story of Ohio’s true tax reality.

The Tax Foundation, which bills itself as “the nation’s leading independent tax policy nonprofit,” approaches tax policy by looking at the complexity of state tax systems, not how those systems actually affect business performance.

The Tax Foundation’s mission is to “simplify” tax policy, which it expresses as a preference for single rate systems. When a state’s tax policy doesn’t align with this philosophy, the Tax Foundation gives it a negative ranking in its reports. For example, states with more than two tax tiers are given lower scores, regardless of how businesses in that state are actually performing.

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