After hosting regional hearings throughout Ohio and conducting months of analysis, State Representative John Adams (R-Sidney) today announced that the Tax Structure Study Committee—a bipartisan committee charged with soliciting feedback from Ohioans to ensure the best tax environment for Ohio’s citizens and businesses—has released a comprehensive chairman’s report detailing the committee’s findings, which may serve as a springboard for legislative initiatives.

“During this General Assembly, we have focused on creating an economy where businesses can thrive and Ohioans can compete for jobs right here within our borders,” said Representative Adams, who served as chairman of the Tax Structure Study Committee. “Creating economic prosperity starts with a tax structure that is conducive to business growth and job creation. The people of Ohio made their voices heard when we came to their areas of the state and helped us to put together this report of recommendations, which may serve as the genesis of future legislation.”

The Tax Structure Committee met six times during August and September and heard testimony from more than 80 witnesses across the state. The committee was specifically commissioned to identify and review the sales and use taxes and their purpose, review the commercial activities tax for impact on businesses, and review current tax expenditures.

Based on these hearings, Chairman Adams made the following recommendations in the committee report:
1. Tax expenditures should be reviewed for validity every two years on a rotating basis during off-budget years, so that the results may be available during budget negotiations. The House Ways and Means Committee should establish a standing subcommittee to review tax expenditures and issue a report to the House.

2. There should be further discussions on the purpose of the use tax in Ohio’s tax code. The sales tax should apply to all economic activity, including services and goods.

3. The commercial activities tax should be modified to establish a tax liability of the lesser of two calculations: a tax on gross receipts, as established by the current CAT law, or a tax on net income. This would reduce the discrepancy in effect that arises from the pyramiding of CAT liability according to industry type.

4. There should be a continuing, open dialogue on tax issues, as Ohio’s tax code is expansive and complicated. The study committee, while helpful, could not cover all aspects of the code.

“This has been a productive process and I look forward to further discussing these findings with the Legislature,” Chairman Adams said.

Read the full report here:

Tax Study Committee Chairman's Report

State Rep. Peter Stautberg is featured on an episode of "Ohio in Focus."

The Post, 8/17/2011

Letter to the editor in the Marietta Times (8/11/2011)
Know the facts about Senate Bill 5

As debate about Senate Bill 5 continues, the opponents of this bill have done a good job of framing these responsible, cost-saving reforms as an "attack on the middle class." They know it is their best opportunity to sway public opinion to their side-so they, at best, ignore the truth or, at worst, mislead altogether.

They would like you to believe that collective bargaining is being completely taken away from public workers, which is simply not true. SB 5 does not eliminate a public employee's right to collectively bargain; it merely places reasonable cost-containment measures on issues such as public employees' healthcare and pension contributions. Public workers will still be able to bargain for their hours and wages and, for public safety and law enforcement, safety equipment can also be subject to collective bargaining discussion.

Additionally, SB 5 makes labor negotiations more transparent. Currently, much of these negotiations happens behind closed doors. It is important for the public to know what happens at the bargaining table because, after all, it is their money that will ultimately be affected. SB 5 reserves a seat at the table for taxpayers and allows them to see how their own money is being spent and whether that money is being spent efficiently.

In addition to being a legislator who voted for SB 5, I am also a small business owner and-most importantly-a father. I see these reasonable reforms as an important step toward strengthening our communities, reducing our tax burden and improving public services by ensuring that our classrooms, patrol cars and fire stations are staffed with the most qualified individuals.

By implementing the policies in SB 5, Ohio will join other states, including Wisconsin, Indiana and New Jersey, in returning to a responsible government, where the public has a voice in determining how its taxpayer money is spent.

Lower business costs earn state high marks
Tax reforms begun in 2005 help propel Ohio to better rankings in CNBC's evaluation

Wednesday, July 13, 2011 06:41 AM
By Mark Williams

THE COLUMBUS DISPATCH

Business-friendly changes in Ohio's tax structure have given the state a boost in a national ranking.

Ohio moved up to fifth this year from 29th last year in the 'cost of doing business' category that is part of business cable-television channel CNBC's 'America's Top States for Business.'

The improvement in that category was a major reason that the state jumped to 23rd on the list overall, compared with 34th last year.

"Folks across the country are starting to see the full impact of (the business-tax reforms) and that this system created in Ohio is allowing people to fully grow their business at lower costs," said Thomas Zaino, a former Ohio tax commissioner and now managing partner of the Columbus law firm McDonald Hopkins.

He said the value of the tax cuts, when fully implemented, totaled $2billion a year for businesses and consumers. The cut was significant not just for its size, he said, but because the state was able to go ahead with it despite the worst recession since the Great Depression.

"What impresses people is the thoughtfulness and logic" of the tax reforms the state has put in place, said Ed Burghard, executive director of the Ohio Business Development Coalition.

Iowa and Arkansas tied for first in the "cost of doing business" category, followed by Missouri and Kentucky.

Ohio began implementing sweeping business-tax reforms in 2005, substituting a modified gross-receipts tax for corporate income and franchise taxes and eliminating business tangible personal-property taxes.

Ohio also has been phasing in a 21 percent personal income-tax cut that will be finished this year.

Burghard said it often takes several years for reforms such as those done in Ohio to start showing up in surveys such as the one by CNBC.

"The bulk of the tax reform is actually starting to hit the numbers," he said.

The CNBC study comes after a report by the Council on State Taxation in April said Ohio had the third-lowest tax burden for new business investment.

But not everyone has been impressed with Ohio's reforms.

The conservative-leaning Tax Foundation put Ohio 46th in its 2011 Business Tax Climate Index, which also takes into account other taxes beyond those just paid by business.

Taxes are only a part of the equation that CNBC uses for its ranking on the cost of doing business. The business channel also takes into account utility costs, the costs of wages and costs for office and industrial space.

Of the 10 categories included in the rankings, the state's best finish was No. 4 in the infrastructure and transportation category. The worst finish was No. 50 in the work-force category, which takes into account factors such as the education level of the state's work force, the number of available workers and union membership.

The state also came in 42nd in business friendliness, a category that includes regulation and litigation.

The study takes into account 40 measures of competitiveness.

State Representatives Kristina Roegner (R-Hudson) and Cliff Rosenberger (R-Clarksville) today introduced legislation that, when enacted, will prioritize the distribution of taxpayer-supported funds for family planning services.

Top priority would be granted to public entities that provide family planning services (such as local boards of health); second-tier priority would be given to federally qualified health centers, or community health centers; third-tier priority would be given to non-public entities that provide comprehensive primary and preventative care services and family planning services; and fourth-tier priority would be given to non-public entities that provide family planning services but do not provide comprehensive primary and preventative care (such as Planned Parenthood, the nation’s largest abortion provider).

"Certainly, public money should first be spent to fully fund public entities before non-public ones and then should fund those who provide comprehensive care services before funding those who only provide family planning services,” said Roegner. “As a woman and as a taxpayer, establishing priorities for how public money is spent just makes sense.”

This legislation will positively impact taxpayer-funded health organizations as well as comprehensive primary care facilities. While no entity—public or private—will be excluded from applying or receiving such funding, this new legislation will reaffirm the state’s public policy to prefer childbirth over abortion (O.R.C. 9.041).

Similar legislative approaches have been adopted in Texas, Kansas and Tennessee.

We often hear and read news reports in which Americans emphasize that they believe the government is doing nothing for them. I've certainly empathized with this viewpoint many times over the years. But in regard to the state of Ohio this year, referencing a "do-nothing" government could not be further from the truth.

Now that the state operating budget has been finalized - filling the $8 billion budget gap without raising taxes - the first six months of my time as House speaker have come and gone. The summer recess from Columbus provides legislators with a great opportunity be even more in touch with our districts and come up with new and innovative legislation to pursue. But I'm very proud of what the Ohio House of Representatives has accomplished so far this year.

This has been a session focused on job creation and spending restraint. If I had to choose a word to highlight the actions we've taken, my answer would be "reform." The reforms we've enacted, especially in regard to business development, were not only capped off most recently with the new budget, but by the fact that legislation I sponsored was also passed to find ways of updating the content and structure of the Ohio Constitution through the Ohio Constitutional Modernization Commission.

Republican members of the House are finding new ways of carrying out the state's business and making many of the long-overdue changes our state has needed. A terrific example of this type of reform is the collective bargaining legislation that was passed not long ago. Through this effort, we have found a way to restore control of the management of our tax dollars while providing our state's public employers with more flexibility. This ensures that Ohioans are getting a fair deal, while at the same time protecting jobs for our public employees and improving our schools and safety forces.

We can also save money by responsibly addressing the inadequacies of Ohio's criminal sentencing practices, which currently cause prison overcrowding and place a heavy fiscal burden on taxpayers. A package of reforms that the House passed will reduce recidivism and streamline Ohio's correctional system, making it more affordable and effective. With more sentencing options, from adjustable sanctions to various structured programs, we can save tax dollars by offering alternatives to incarceration for non-violent offenders who have the potential to be reintroduced to society.

But of course, when it comes to government, our voting at the ballot box is where it all originates. For this reason, some of our reforms have strived to modernize and streamline our elections operations while being cautious against fraudulent and unethical voting practices. We can do this through verifying our voter rolls, improving the verification process for absentee and provisional ballots, and updating our statewide standards on how elections are carried out. There are some issues included in the reform that are as simple as allowing voters to change their addresses online.

Ohio has a long tradition of striving for fair and honest elections. If these reforms do nothing more than provide an assurance of the sanctity of the ballot, then that's a pretty good thing for Ohioans to have.

Reforms like these require a lot of action and many hours of work - listening to constituents and focusing on the details that will lead to improvement. I believe that if we are to make a difference in these areas, what we do needs to be done right. During this General Assembly, it has been done right, and that's something that all Ohioans can be proud of.

Ohio Shows the Way on Death Tax Repeal

July 2, 2011

Ohio Gov. John Kasich made good on a major campaign promise Thursday, killing the state's estate tax in the process of enacting the 2012-13 budget. He also managed to kill off an $8 billion deficit without raising taxes—a model for fiscally squeezed states nationwide.

The end of the death tax, which goes into effect on Jan. 1, 2013, will help stop the hemorrhaging of small businesses and jobs from the Buckeye State. Ohioans had suffered long enough with the levy on inheritances, with a 6% tax on personal and business assets above the $338,333 exemption, up to $500,000, and a 7% tax on assets above $500,000. The death tax was a major reason that business, jobs and capital have fled the state.

Ohio's nearly 200,000 small businesses employ some 2.3 million people—about half the civilian labor force—and support annual payrolls exceeding $77 billion. But businesses and jobs have been leaving Ohio for years, many to the 28 states without a death tax.

The stampede for the exits comes as no surprise: Dying in Ohio was expensive. When federal (35% on all assets exceeding $5 million) and state taxes are combined, an Ohio family with a successful business could lose up to 40% of everything they had worked for.

While some opponents of repeal defend the death tax on the grounds that the state, like the federal government, needs the revenue, the truth is it yielded little revenue—around 2% of the average local jurisdiction's revenues in Ohio, less than two-tenths of 1% for Columbus, and around 1% for Washington.

What estate taxes do produce is flight. Business owners flee high-tax states for low-tax or no-tax states, and wealthy people dodge the entire matter by hiring expensive lawyers who establish trusts, foundations and other devices that protect them from the tax man.

The owners of family businesses and family farms typically can't afford such games. For all practical purposes, they're cash-poor, with most of their capital—and net worth—tied up in land, buildings, equipment, inventory and payroll.

The story of Dave Johnson—president of the 100-year-old, fourth-generation family-owned business, Summitville Tiles, Inc. (a ceramic tile and brick manufacturer whose products festoon both the roof of the White House and the floors of McDonald's restaurants around the world)—is typical.

Mr. Johnson, like many other small to mid-sized manufacturers, struggles to keep his business competitive in the face of the construction-industry meltdown. It hasn't been easy. And the estate tax is another worry. If he didn't have to contend with it, he could invest in more machinery, technology and employees—confident that the business would endure into the next generation.

It's much the same elsewhere. A 2008 study by the Connecticut Department of Revenue Services, for example, named the estate tax the primary reason wealthy residents left the state and, in many cases, took their businesses with them.

The study also showed, if further confirmation were needed, that the economies of states without estate taxes grew 50% faster, and created nearly twice as many jobs, than states with death taxes.

Against this backdrop, a two-year volunteer grass-roots campaign took hold in Ohio, garnering 85,000 petition signers for repeal of the estate tax and uniting a coalition that called on Ohio lawmakers to end the destructive tax. With this support and a state legislature committed to increasing jobs and local revenues over the long haul, the failed status quo was defeated.

Not surprisingly, public officials in some of Ohio's wealthiest cities were the most vocal opponents of repeal. Because a portion of Ohio's estate tax revenue goes to the locality where the decedent lived, wealthier jurisdictions received the bulk of the revenue. The estate tax might seem a boon for rich communities that want a new park or pool, but it offered little to poorer jurisdictions.

What most of the critics don't understand is that repeal of the estate tax ultimately means more tax dollars, not fewer. A 2009 Duquesne University study found that state and local governments lost some $3 in non-estate tax revenues for every $1 increase in federal estate tax revenue. Overall, the study calculated, eliminating the federal estate tax would boost state and local tax revenues by approximately $9.3 billion annually. With Ohio business owners now able to focus their energy and resources on growth and success, rather than on the survival of their businesses after they die, we can expect them to invest more money in those 200,000 businesses, hire more workers, and increase purchases—all of which will help increase the tax base.

Ohio's repeal of its estate tax, after nearly 120 years, may not lead to an avalanche of repeal activities around the country, but it's already having a positive effect. Last month, for example, Maine lawmakers doubled their estate tax exemption to $2 million from $1 million. Oregon lawmakers rejected a proposal to increase their estate tax, as did North Carolina. Momentum is moving in the right direction.

State governments may need tax revenue, but they don't need taxes that destroy wealth and drive away job-creating business owners.

Mr. Batchelder is speaker of the Ohio House of Representatives. Mr. Boyle is the co-founder of Citizens United to End Ohio's Estate Tax. Mr. Patten is president of the American Family Business Institute in Washington, D.C.

Rep. Andy Thompson is featured on an episode of Ohio in Focus.

Rep. Terry Boose is featured on an episode of Ohio in Focus.

Columbus Dispatch