News & Notes September 12, 2013
Lets talk about TAX Baby, Lets talk about fiscal realities, who pays for all the park swings and the school things, lets talk about TAX….
Do you think the tax policy debate is sexy? It is now! The state is leaning towards the denial of tax credits for the company Pure Romance to move its offices from Loveland, Ohio (Just outside of Cincinnati) to downtown Cincinnati. While others are going to discuss the political realities related to JobsOhio, and others will discuss the ethics and morality of taxpayers subsidizing ‘romantic items’, I think we need to talk about the tax policy in general.
State taxpayers were offering a gift of $108,000 to Pure Romance, whose valued at over $100 million. We need to be cautious with tax incentives to corporations, because often we will award business decisions that would occur with or without the tax incentive. Tax incentives, credits, and loopholes should be used in limited circumstances with clearly defined metrics and evaluation standards. Most corporations will not create new jobs or expand production without the market demanding that they do so. We have to identify if the tax credits are a ‘cherry on top’ of a decision the business would make. It will be interesting to see if Pure Romance stays in Ohio without the tax credits.
Think of it this way, if you and your family considered the purchase of a new house, would you base your decisions on who will buy you pizza and drinks on moving day? Probably not. If you had multiple sellers making the offer to buy pizza, as the buyer we might try and get some better pizza and beer out of the deal by playing one seller against the other. It would be foolish to make a major investment based off of who is willing to buy pepperoni instead of plain cheese.
PLEASE NOTE: The Ohio House Tax Reform Study Committee holds its final hearing today on general tax policy in North Ridgeville. Next Wednesday, the committee will hold its final hearing on the municipal income tax in Columbus at the statehouse.