Interested Party Testimony on Municipal Tax Reform Before the Ways and Means Committee Ohio House of Representatives
First, Ohio’s tax burden is too high to keep us competitive in the global economy, but it’s not just our state taxes that are a problem. Local taxes are just as bad or worse. According to the Ohio Department of Taxation, Ohio ranks 13th in local tax burden as a percentage of income. According to the non-partisan Tax Foundation, our business tax climate ranks a poor 39th while our overall state and local tax burden still puts us in the top half at 20th place.
To reform our tax system in the long run, we must address not only the rates we pay but also how we tax. In the shorter term, there is something Ohio can do to alleviate serious burdens on Ohio businesses, particularly small companies: municipal income tax reform.
Ohio is one of only a few states that even allow municipalities to levy income taxes. Of the states that allow municipal income taxes, the majority of these only see taxes assessed by major cities. By contrast, with 593 municipalities levying this tax, Ohio trails only Pennsylvania, with 2,492, in the number of taxing municipalities nationwide.