Legislative Actions Are Revitalizing Ohio’s Economy
By: State Representative Bob Gibbs
The Ohio General Assembly adopted measures that are transforming and revitalizing Ohio’s economy. Reforms of our tax code, civil justice system (tort) and a fiscally conservative budget are providing for private sector growth and job creation. As a result of these initiatives, over 36,000 jobs since June 2005 have been created from both new businesses in our state along with continued growth and expansion of Ohio industries.
Site Selection magazine ranked Ohio number one in the Midwest and number two in the United States in 2005 for new and expanded facilities with greater than one million dollars of investment and creating at least fifty jobs. For 2005, Ohio had $3.8 billion in private investments and over 20,000 new jobs. Additionally, the first four months of 2006 the Ohio Department of Development/Ohio Tax Authority approved seventy new projects for loans, bonds or tax credits totaling over $1.39 billion in investments.
Another barometer of Ohio’s economy are the operating revenues received by the State. Most of Ohio’s state operating budget is derived from individual income and sales taxes. Ohio’s total tax revenue is up 2.5 percent, income taxes alone are up 2.2 percent for the June 30 fiscal year end over last year’s fiscal year. This increase is very positive considering we cut the state sales tax by one-half percent and initiated a five year 21 percent individual income tax cut at 4.2 percent per year. This illustrates that more Ohioans are working and earning more. For the fiscal year end the budget was in the black and the budget stabilization fund (rainy day fund) was increased by $820 million for a balance of $1.011 billion, which was totally depleted a few years ago. Fiscal restraint by the Republican led legislature resulted in the lowest growth budget in more than 40 years. Because of this good news the Governor announced in July the acceleration of the five year 21 percent income tax cut.
A major contributing factor to this positive trend is a result of reforming Ohio’s outdated and uncompetitive tax code. The elimination of the corporate franchise tax and the tangible personal property taxes helps businesses in Ohio to be competitive in today’s global marketplace. For example, the tangible personal property tax, (TPP) essentially “punished” businesses for investing in new technology and equipment to improve their productivity and competitiveness, by adding additional taxes on those items. For new purchases starting in January 2005 there is no TPP tax and for tangible personal property on record before January 2005 those taxes are being phased out and will be completely eliminated in two years.
Proof that fiscal restraint and tax policy does influence our economy one only needs to look at New Jersey. Early last summer New Jersey increased their income tax rates to solve their budget problems. The result this year was a larger deficit which led to a six day government shutdown and a one percent increase in their sales tax rate. The old saying goes if you want less of something, tax it more. As a consequence, individuals and businesses will explore other options and yes some will leave and go to other states that have a tax structure that encourages business expansion and better opportunities. New Jersey’s tax and spending policies along with their very high property tax rates places them in a very uncompetitive position that will only deepen their economic problems.
We need to stay the course regarding fiscal restraint and continue with additional tax reforms. I have introduced legislation that repeals Ohio’s Death Tax, cuts capital gains taxes and cuts unearned income taxes for persons 65 and older by 50 percent. These additional reforms will provide for more investment in Ohio and economic growth.
The bottom line is Ohio’s policies under Republican leadership are resulting in positive economic growth and will provide the resources for priority areas such as: funding education and infrastructure projects that will enhance Ohio’s economy and opportunities for all Ohioans.