During the Labor Day holiday, it is always good to check in with Policy Matters Ohio to see the state of workers. Unfortunately, they only have 2008 data available on the state of employment and wages, but there is a good story about the disparity in the 2005 tax reform to the Commercial Activity Tax. This was pushed by business, but does not seem to be bringing in the same kind of revenue that the previous tangible personal property/franchise tax plan brought in. The new tax is 7.4% down from what was expected. Ohio is now down $200 million from what was expected only six months ago.
“The General Assembly should take action to bolster business taxes and the CAT in particular,” said Zach Schiller, report author and Policy Matters research director. “One obvious place to start is by reinstating the self-adjusting trigger on the CAT that existed originally.”With the weak state of the American economy, this is a probably the worst time to experiment with new tax schemes. If we are already behind in tax predictions only two months after the start of the biennium, how is the budget going to look during the November 2010 state elections? Who will be bold enough to say that we need more revenue in this state during an election year? I doubt if anyone will suggest higher taxes, but maybe we have learned something from the California IOU experience of this summer.
Brian
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