Retail Would Benefit By Proposed Tax Plan

Dayton Daily News - May 20, 2005

Dayton Daily News

By William Hershey

Although Gov. Bob Taft’s proposed overhaul of the tax system is aimed at
boosting manufacturing in Ohio, the retail sector would gain the most jobs under the proposal,
according to an analysis released this week by the Development Department.

The analysis broke down by category the additional 47,348 jobs that would be created by 2010,
based on a study produced by REMI Consulting of Amherst, Mass. The state paid $154,000 for the study.

Lt. Gov. Bruce Johnson released the study last month but a breakdown by job type was not available. The study
compared what employment would be as the result of proposed tax changes with it would be under the current tax

According to the analysis, the top five categories for additional jobs would be: retail, 9,517; construction, 5,728; food
service, drinking places, 5,211; manufacturing, 4,237 and state and local government, 2,942.

The study results released in April by Johnson showed an additional 43,250 jobs overall but that was by fiscal year
2010, from July 1, 2009 to June 30, 2010. The new analysis was based on additional jobs by calendar year 2010.

According to the analysis, about 8.9 percent of the additional jobs would be in manufacturing. Currently, about
15.7 percent of Ohio’s jobs are in manufacturing, according to the state, the largest percentage of any job sector.

The analysis also found that about 20 percent of the additional jobs by 2010 would be in retail. Currently, about 11.8
percent of the state’s jobs are in retail.

The REMI analysis was based on a tax proposal including: a phased-in 21 percent reduction in personal income tax
rates; phasing out the corporate franchise tax and the tangible personal property tax on business machinery, equipment,
inventory, furniture and fixtures; a state sales tax of 5.5 percent it’s now 6 percent statewide; increased taxes on
cigarettes, beer and wine and phasing in a low-rate, broad-based commercial activity tax on business gross receipts
on Ohio sales.

Bill Teets, development department spokesman, said the jump in retail and food service jobs represents an economic
boost from the income tax cuts that will put more spending money in Ohioans’ pockets.

Also, he said manufacturing jobs have been declining, partly due to increased efficiency. “We put together a tax plan
that we said was going to better reflect Ohio’s economy and our overall economy is a mixture of manufacturing and
services,” Teets said.

Zach Schiller, a critic of the tax proposal, said, however, the analysis appears to indicate the plan would fall short of
being the “savior for manufacturing” that Taft’s “rhetoric” had suggested.

Schiller, research director for Cleveland-based Policy Matters Ohio, said he is skeptical of the overall study because it
did not consider the need to either reduce state spending or increase other taxes because the tax changes would produce
less state revenue than the system now.

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