Burning question: Is tax reform in Ohio possible?

Published 12:00 am Friday, August 20, 2004

Over the course of the last 50 years many things have changed - our state has grown as a whole, and the economy has experienced many a surge and setback.

Ohio, which once led the nation in manufacturing, now ranks third behind California and Texas, having lost hundreds of thousands of manufacturing jobs over the years - 118,000 in the past three years alone.

We now operate in a service-dominated economy in which lower-paying service-related jobs now replace the once higher-paying manufacturing jobs held by so many Ohioans.

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As a result of this service economy, Ohio's personal average income has dropped below that of the national average.

At the same time, Ohio - along with many other states - has been facing budget shortfalls - here in the Buckeye state our state budget was grossly out of balance at the beginning of 2003.

All the while, as changes in our economic landscape took place over 50 years, our tax structure remained virtually unchanged.

In an attempt to help Ohio emerge from an economic slump, Governor Bob Taft instituted the Third Frontier program, an initiative designed to attract and nurture the growth of high tech jobs in Ohio.

That effort, however, took a setback when voters rejected his proposal to develop and recruit new higher paying, high tech jobs for Ohioans.

Still, Ohio's fiscal woes needed to be addressed, and so a commission was formed, composed of some of Ohio's best economic and business minds who spent the better part of a year studying projected state expenditures and taxation.

The commission concluded that Ohio needed tax reform and recommended that taxation be expanded to the service economy, reducing the business franchise tax for small and intermediate businesses.

The study commission also found that Ohio's business franchise tax is very high in comparison to other states, making the recruitment of out-of-state businesses, as well as the nurturing of new business, quite difficult.

The fact of the matter is that businesses create jobs and without them our economy remains stagnant and we struggle to compete with other states for jobs that are so desperately needed in Ohio.

The governor has proposed a sweeping change in taxation to the service economy with the hope of lowering the franchise tax.

Yet, as soon as this proposal was made public an outcry roared across the state.

Pressures mounted in many areas and one by one many of the proposals were dropped, leaving a very small percentage of revenue from the service economy.

This adventure with tax reform will, no doubt, continue to be a major challenge.

During the past year alone, tax reform has been rejected in the states of Virginia and Alabama.

The old senator from Louisiana, Russell Long, analyzed the problem years ago by saying, "Don't tax you; Don't tax me; Tax the man behind the tree."

My colleague, State Representative Sally Conway Kilbane, a Ph.D. in economics from the Cleveland area, is the Chairperson of the Ways and Means Committee here in the Ohio House.

She and her committee will continue to work toward modernizing a tax system that will encourage small businesses to develop and grow by spreading the tax burden and curb the loss of manufacturing jobs to other states and, for that matter, third world countries.

I will encourage and support these efforts to stimulate small business development, but I will support tax relief for individuals as well.

As previously mentioned, Ohio has shifted from a manufacturing-based to service-based economy.

Many Ohioans are now forced to try and make do with less.

These hard working citizens need and deserve tax relief as much as any business or corporation does.

I do not believe anyone making less than $20,000 a year should have to pay state income tax, and I will work in the coming months to ensure that the idea of tax relief for individuals with low incomes is not lost in the debate.

Rep. Clyde Evans can be reached by phone at (614) 466-1366 or by mail at 77 S. High St.,

11th floor, Columbus, Ohio 43215.