In many respects, being unique is a welcomed quality. But one aspect that makes the state of Ohio unique also drastically hurts its chances for attracting businesses.
Ohio is the only state in the country that allows each city and village to establish its own set of rules and regulations for collecting taxes. Municipalities collect what is called the municipal income tax to help it meet local governments’ costs. This is very similar to how the state or federal governments collect income taxes.
Today, there are more than 600 different municipalities enforcing their own compliance regulations. When every municipality in the state can establish its own set of rules for merely collecting taxes, small businesses in particular are hurt because the costs of complying with all these different sets of regulations add up in a hurry.
At the beginning of this year, legislation was introduced in the House that aims to bring uniformity to the process of collecting municipal taxes. House Bill 5 is currently being considered by the House Ways and Means Committee.
I support this legislation because it is a common-sense approach to encouraging businesses to locate and grow in our state. The states are as competitive as the free market itself, and tax policy certainly weighs heavily on the minds of employers when looking for a location. Business owners and site selectors have told us that Ohio’s municipal income tax is one of the steepest barriers to them coming to our state.
That Ohio is the only state in the country to have this system should be a firm indication that this is either an antiquated system, or one absent of common sense. Encouraging business growth in Ohio is something that will benefit all villages, cities and townships in the state.
The money saved by reducing businesses’ compliance costs, as well as the new businesses this idea will hopefully attract to the state, will make Ohio more competitive nationwide.
John Becker is a state representative serving Ohio’s 65th House District.