This October 2002 study finds that corporate tax avoidance and state policy have contributed along with other factors to the weakening of Ohio's corporate franchise tax. Revenue from the state's corporate profits tax fell from 16 percent of the taxes supporting Ohio's General Revenue Fund in the mid-1970's to 4.6 percent in fiscal year 2002. Such revenue has fallen steadily for the past four fiscal years, beginning before recent declines in corporate profits. Schiller documents various "tax planning" strategies used by multistate business to avoid the franchise tax, and reports that tax caps and credits are costing the state millions of dollars in annual revenue. The study concludes with recommendations for fortifying Ohio's franchise tax and eliminating opportunities to find ways around it.

Executive Summary