Reforms in Ohio Yield 3rd Most Competitive Tax Climate
April, 2011 - Ohio has the third lowest effective tax rate on new investments, according to a new report by Ernst & Young LLP. The April 2011 study “Competitiveness of State and Local Business Taxes on New Investment” looked at state and local tax laws and then calculated tax burdens for a variety of different businesses based upon standard profiles of capital investment, sales, and operating costs, and profit margins. “The analysis focuses on capital investments in industries that have location choices, such as factories, or headquarters, rather than those that are tied to a specific geography, such as retailers or hotels,” the report said. When the tax burden was calculated for standard profile headquarters, R&D, office and call center, durable manufacturing and non-durable manufacturing facilities, Ohio’s effective tax rate in new investment was 4.4 percent. For comparison, the effective tax rate for Texas was 6.9%, New York and Pennsylvania were 7.1%, Florida was 7.4%, California was 7.7%, and North Carolina was 8.6%. The average among the states was 7.9%. “Ohio’s high business competitiveness ranking reflects the major business tax reforms adopted in 2005 that substituted the modified gross receipts tax (Commercial Activity Tax) for corporate income, franchise, and tangible personal property taxes,” according to the study. For more information on Ohio’s tax reform, click here. |
States with Lowest Effective Tax Rate on New Investment
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