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Is Ohio's tax burden to blame for NCR move?

Officials debate the notion that the tax structure is driving businesses out of the state.

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By Laura A. Bischoff, Staff Writer Updated 10:27 PM Thursday, June 4, 2009

Georgia’s warm sunshine, sweet peaches and southern hospitality aren’t the only things it has going for it.

Georgia rolled out $60 million in tax incentives to help lure NCR Corp., and, according to the Tax Foundation, Georgia has the eighth lowest corporate tax burden in the nation.

So, is Ohio a less business-friendly state than Georgia? Are high taxes driving companies away from the Buckeye State? It depends on whom you ask.

“The tax structure in Ohio is very punitive, and it does give advantages to other states,” said U.S. House Minority Leader John Boehner, R-West Chester.

But Ohio Tax Commissioner Richard Levin disputes this.

In 2005, Ohio passed a tax reform law that led to a 21 percent across-the-board drop in personal income taxes and the elimination of the corporate tax on net income and the tax on personal property used for business.

“We are reducing our taxes probably more than any other state during this five-year period that ends this year,” Levin said.

But he added, “You probably could say that lots of folks don’t know that.”

Like it or not, Ohio seems to have a bad reputation when it comes to tax burdens — thanks in part to the Tax Foundation annual rankings and anti-tax politicians.

Boehner blames part of Ohio’s woes on its tax system.

“Anyone who can figure out how to spend six months and a day in Florida does,” he said. “We’re driving people with wealth out of the state. Our tax code pushes them to leave.”

Zach Schiller, of Policy Matters Ohio, a think tank based in Cleveland, disagrees.

“With most states, the difference in tax structure is not that great,” Schiller said. “Ohio’s overall taxes are basically pretty average.”

NCR Chairman and Chief Executive Bill Nuti told the Atlanta Journal-Constitution that Georgia has the eighth lowest corporate taxes — the same ranking given by the Tax Foundation.

But Deputy Ohio Tax Commissioner Fred Church countered that he doesn’t know how that could be true since Ohio no longer taxes corporate net income and got rid of its tax on personal property used for businesses. Ohio also is reducing its personal income tax rates by 21 percent over five years.

The Ohio Business Roundtable and tax commissioners in both Gov. Ted Strickland’s and former Gov. Bob Taft’s administrations have said the Tax Foundation’s rankings are seriously flawed.

A better way to compare taxes is to look at Census data and examine the taxes on a per capita basis or as a percentage of personal income, according to Ohio Tax Commissioner Richard Levin.

According to 2006 U.S. Census data, Ohio’s state and local tax burden as a percentage of personal income ranked 18th, and on per capital basis it ranked 24th. And those rankings came before the full force of Ohio’s 2005 tax reform took effect.

Georgia rolled out $60 million in tax incentives to help lure NCR Corp., including a new twist on the state’s “Mega Tax Credit” that Gov. Sonny Perdue signed into law May 5.

But Ohio can and has put together big tax incentive packages, including $60 million for NetJets Aviation Inc. in Columbus last year.

“We could have matched or exceeded” any offer from Georgia, Lt. Gov. Lee Fisher said Tuesday.

In the end, though, NCR’s decision to move from Dayton to Georgia wasn’t based solely tax breaks and rates.

“While the incentives will definitely lower our cost of operations over the next 10 years by tens of millions of dollars, the reason we are here is not just about the cost,” Nuti told the Atlanta Journal-Constitution.

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