From Darke County Partnering for
Progress...
CNBC
Ranks Ohio Fifth in the Nation
for Cost of Doing Business
July 16, 2011
State’s
business-friendly redesign
helps companies retain more profits and keep costs down
COLUMBUS,
Ohio, July 12, 2011
/PRNewswire/ --Cost is a major consideration when a company chooses a
location.
The ideal business location maximizes the value of the investment by
delivering
a perfect balance between access to mission-critical resources and low
overhead
costs.
Ohio
continues to gain recognition for
its favorable business climate and tax structure, combined with low
business
and personal costs, make the state an increasingly viable location for
business
growth. According to CNBC’s “America’s Top States for Business 2011”
report,
Ohio ranks 5th in the nation for Cost Of Doing Business. Ohio improved
to 5th
place from 29th place last year due to a multi-year effort to reform
the
state’s tax structure, which took full effect in 2010.
The
CNBC ranking is based on tax
burden, including individual income and property taxes, as well as
business
taxes, particularly as they apply to new investments. Costs for
utilities,
wages, and rental costs for office and industrial space were also
considered (rental
cost information furnished by CoStar Group).
The
top five states for Cost of Doing
Business are Iowa and Arkansas tied for first place, followed by
Missouri,
Kentucky and Ohio.
Ohio’s
proactive, business-friendly
redesign was implemented to help companies better compete in a 21st
century
global economy and deliver the perfect balance businesses and their
owners need
to achieve that success.
Cost
of doing business is a very
important factor CEOs and entrepreneurs consider when determining a
location
for capital investment. The more investment capital that actually makes
it to
product development and commercialization, the greater the probability
of
success. And, the faster the return on investment.
“Just
one of Ohio’s many business
incentives includes a sweeping tax reform, which is recognized as a key
contributor to keeping overhead costs down,” said former Ohio Tax
Commissioner
Thomas M. Zaino, J.D., CPA, now member in charge of the Columbus office
of the
McDonald Hopkins LLC law firm. “In fact, Ohio was recently recognized
as having
the third friendliest tax environment in the nation.”
Zaino
refers to the report issued by
the Quantitative Economics and Statistics Practices (QUEST) of Ernst
&
Young in conjunction with the Council On State Taxation (COST), which
provides
a state-by-state comparison of tax liabilities, ranking Ohio third in
the
nation for friendliest tax environment.
Over
the last five years, Ohio
lawmakers dramatically revamped the state’s tax structure to create the
lowest
tax rates in the Midwest and an extremely profit-friendly business
climate for
companies that locate in the state, despite a national recession that
caused
several other states to raise taxes. The state’s central location and
tax
structure makes it cost effective for companies to serve customers in
North
America and around the world.
The
most notable changes to Ohio’s tax
system include the elimination of two very burdensome business taxes –
the
corporation franchise tax and the tangible personal property tax. These
taxes
were replaced by a new, 0.26 percent Commercial Activity Tax (CAT),
which
applies only to in-state sales. For example, if a business were to ship
100
percent of its sales out of Ohio, it would pay zero CAT, increasing
Ohio’s
appeal to companies that export goods out of the state or country.
“Because
the CAT applies to receipts
rather than profits, a more profitable business does not incur higher
taxes,”
said Howard Fleeter, Ph.D., a partner in the Columbus-based economic
analysis
and public policy research firm of Driscoll & Fleeter.
Companies in states
that tax profits incur a “success penalty” because efficiency and
productivity
gains trigger higher taxes.
Another
important change is a 16.8
percent reduction in the personal income tax, which is scheduled to
grow into a
21 percent reduction for 2011. This benefits individual wage earners,
unincorporated businesses and entities such as S corporations and
limited
liability corporations (LLCs), which are increasingly popular business
structures
for growing businesses.
Elimination
of taxes on the first $1
million of gross receipts is another aspect of Ohio’s business tax
reform that
makes the state particularly attractive to entrepreneurs. Instead,
businesses
pay a minimal, flat fee of $150 on up to $1 million in sales.
In
addition, Ohio businesses also pay
no tax on capital investments, which frees up funds for investment in
plants,
equipment, inventory and personnel. And, because only business activity
that
takes place in Ohio is taxed by the state, entrepreneurs have an
incentive to
serve customers across the country and around the world.
Economic
development incentives and
public-private support encourage business success and make the state an
ideal
location for businesses to locate or expand operations. Also, strategic
investments by the Ohio Third Frontier are paving the way for
commercialization
of new technologies.
In
addition to a low cost of doing
business, Ohio provides all the criteria needed to successfully start,
grow or
expand a business -- access to supply chain and markets, access to
business
capital and support services, access to knowledge and labor and access
to a
balanced life.
“Ohio’s
success is not solely
dependent on the strength of its business advantages. It’s about Ohio’s
promise
of work-life balance,” said Ed Burghard, executive director of the Ohio
Business Development Coalition, the nonprofit organization that markets
the
state for capital investment. “Low-cost, low-stress communities and
short
commutes create the State of Perfect Balance, where you can achieve
both
professional and personal success without sacrificing one for the
other.”
About
the Ohio Business Development
Coalition:
The
Ohio Business Development
Coalition is a nonprofit organization that provides marketing strategy
and
implementation to support Ohio’s economic development efforts. For more
information, visit Ohio Business Development Coalition
|