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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > June > 07 > Entry
Editorial: Rap on Ohio and Dayton costs jobs
Losing NCR’s world headquarters is not just heartbreaking for Dayton. It’s also a kick in the teeth for Ohio.
People from NCR’s Bill Nuti to Republican gubernatorial candidate John Kasich are using the occasion to trash the state on taxes — a symptom of a bigger problem.
Here’s an exchange with Mr. Nuti from the Atlanta Journal Constitution’s Web site:
“Q: How did you settle on Georgia, Duluth in particular?
“A: We did a complete analysis of the lower 48 states, measuring a state’s political environment, demographics, tax incentives, foreign direct investment, skilled labor, infrastructure, supply chain, airports and, of course, we looked very, very hard at the cost of living.
“Georgia scored among the highest-ranked states for the high availability of a skilled work force and (training). Georgia has a thriving economy, the No. 8 lowest corporate tax rate, No. 16 in the United States for foreign direct investment, great logistics, particularly for supply chain and infrastructure. It’s home to many research centers and many Fortune 500 companies, including many of our customers in town.”
Now, admittedly taxes are just one item on Mr. Nuti’s list. But he happens to be wrong if he’s referring to a state corporate income tax.
Ohio doesn’t have one. So, as a frustrated state tax official asked, how can Georgia’s rate be lower than zero?
Ohio’s primary business tax is the commercial activity tax, which is effectively a tax on sales. NCR will pay that tax on anything it sells in the state regardless of where its headquarters is, and, had it stayed, it would not pay taxes on its profits.
When he bemoaned NCR’s decision, former Republican Congressman Kasich, who is running against Gov. Ted Strickland next year, complained that “Ohio has the seventh highest state and local tax burden in the country.”
Both Mr. Nuti’s tax statistic and Mr. Kasich’s are from a conservative outfit called the Tax Foundation. Researchers and tax commissioners across the country — no matter how their state stacks up — say the Tax Foundation’s methodology is squirrely. If you were doing a bona fide site analysis, you would never get your information from the Tax Foundation.
The real truth is that Ohio’s tax rates — state and local together — are not low, but neither are they outrageous as compared to other states.
According to 2006 Census data, Ohioans’ state and local tax burden, as a percentage of their personal income, ranked 18th. On a per capita basis, Ohio did better, coming in at 24th. (That number is also somewhat misleading because a bunch of states are clustered together, separated by piddling differences.)
The “high tax” rap is maybe not central to, but a big part, of Ohio’s “brand” problem. We’re just miserable — no, make that inept — at telling a rich, but complicated, story:
For instance, yes, Ohio stacks up poorly in its number of college graduates. But the Dayton region is home to a cluster of engineers and researchers — because of the presence of Wright-Patterson Air Force Base and its universities — that is the envy of other communities. (This is a fact; Massachusetts tried to rip off many of them during the BRAC process.)
The numbers of scholars and scientists in Columbus because of Ohio State, and in Cleveland because of the Cleveland Clinic, are phenomenal.
Yes, Ohio once had high labor costs, but the industries where unions dominated — automotive, for instance — have been decimated. The manufacturing Ohio is excelling at today is precision manufacturing. Those jobs still pay well because they require high skill levels.
Yes, the state is exporting too many of its young people. But it’s also crawling with universities and community colleges that are swelling with students who might consider staying if they were offered jobs here.
As for the cost of living, in Dayton and any corner of the state, you can have a palace for what it costs to buy a guest house on the coasts and in large cities. (The notion that the Atlanta area has it over Dayton on this metric is laughable.)
Dayton and Ohio have to look at NCR’s departure as a failure if not in a specific sense, at least in an overall way. Mr. Nuti, who was hell-bent on leaving Dayton, convinced his board that the move was in the company’s interests by parroting information that’s widely believed. Ohio and Dayton have only themselves to blame for not countering that.
The sales job this region and the state have is, indeed, formidable. Perceptions definitely die hard. But there’s something wrong when important truths are on our side and no one’s buying.
Permalink | Comments (7) | Post your comment | Categories: City of Dayton, Economy, Editorials, Ellen Belcher, Local Business, Local History, Montgomery County, Ohio politics
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By Davidss2
June 7, 2009 8:42 AM | Link to this
DDN is owned by Cox Newspapers in Atlanta. Keep that in mind reading the coverage. —————A story http://www.daytondailynews.com/business/ncrs-blunt-words-add-urgency-to-concerns-151458.html talks about companies can’t recruit people to move to Dayton. I wonder why? Welfare mentality. Rhyming reverends trying to capitalize on any mistep like they’re living in the 60s still. A TV 2 station that tries to stir up racial antagonism anytime someone doesn’t follow police direction and is hurt or even killed. Hmmmm. I wonder why folks are leaving Dayton like it’s the 80s again when we all fled to safe schools and better management.
By CD
June 7, 2009 6:03 PM | Link to this
I agree there’s plenty of blame to go around in NCR’s departure, but it seemed more like a bad marriage with NCR’s Nuti like the mid-life crisis husband wanting out. Nothing was going to change his mind. Hope he likes it in Atlanta. Duluth is not exactly urbane or close to that international airport he bragged about, and Atlanta itself gives a whole new meaning to urban sprawl. That region is the geographical equivalent to a heart attack waiting to happen. Overcrowded roads and water wars with neighboring states. NCR could have negotiated for more here and remained a big fish in a small pond. But instead it will be the other way around for Nuti’s company in Hotlanta. Enjoy the congestion!
By William Ahern
June 8, 2009 9:46 AM | Link to this
The Tax Foundation’s annual ranking of state-local tax burdens is the result of a months-long research project by a professional economist, and the burden estimates are sound. We have no reason to boost one state over another, and Ohio’s tax struggles are well known, even putting our study aside. If anything is “squirrelly,” it was Ohio’s decision under Taft to enact a gross receipts tax (the so-called Commercial Activities Tax) when that type of tax is reviled by all sensible public finance experts.
By William Ahern
June 8, 2009 10:18 AM | Link to this
… And now that I take a closer look at Ohio’s tax code, I see the editors are mistaken that Ohio’s corporate income tax rate is zero. When the legislature passed H.B. 66 to enact the commercial activities tax and repeal the old corporate income tax (which they called a franchise tax), they established a five-year phase-in/phase-out period. That unfortunate decision meant Ohio businesses had to deal with two major business taxes with completely different rules for five years. This year, 2009, the commercial activities tax is fully phased in at 0.26% of gross revenue, but the corporate income tax still has one last gasp: firms must compute their corporate franchise tax liability with the old 8.5% rate and then pay 20% of that, effectively a 1.7% rate.
By bobw
June 11, 2009 9:07 AM | Link to this
I agree with Davess2 - Dayton has - for whatever reason - allowed the thug culture to flourish - thereby encouraging “non-thugs” to leave for safer, more peaceful surroundings
By bobw
June 11, 2009 9:08 AM | Link to this
I agree with Davess2 - Dayton has - for whatever reason - allowed the thug culture to flourish - thereby encouraging “non-thugs” to leave for safer, more peaceful surroundings
By j.gleb
October 13, 2009 9:05 AM | Link to this
i too am looking at tax rates and can’t compare dayton to other places. anyone know where to get corp tax rates on ohio? i don’t trust tax-foundation and need to konw as i plan to stay or move my company from dayton. thnx.