Ohio needs a corporate profits tax
Posted January 12, 2021 in Press Releases
Beneficiaries of the pandemic should pay up
Ohio is one of just six states with no state-level corporate profits tax. This means that corporations that are profiting immensely from the pandemic are not contributing commensurately to public services funded by the state. That needs to change, Policy Matters Ohio said in a report released today.
“While many small businesses struggle to stay open, more than a few big corporations are reaping benefits from the pandemic,” said Zach Schiller, Policy Matters research director and author of the report. “Profits at Amazon.com Inc., for instance, nearly tripled in the third quarter, to $6.3 billion. Others, from toymakers to delivery services, are also cleaning up. Meanwhile, millions of Ohioans are having a hard time meeting their basic needs.”
“A corporate profits tax would provide revenue to avert budget cuts and make the long-term investments we so badly need,” Schiller said. “Reinstating that tax, which lawmakers repealed in 2005, also would make Ohio’s tax system more fair, since it is one of the few taxes based on ability to pay.” Though it had many caveats and was at most a rough estimate, an analysis prepared by the Legislative Service Commission for state Rep. Michael Skindell found that such a tax levied at 8.5% could provide nearly $500 million a year in revenue.
Under the proposal, corporations would figure their Commercial Activity Tax (CAT) and their tax under the corporate profits tax, and pay whichever was higher. The smallest companies would pay no tax or a flat $150, as they do under the CAT; only profitable corporations would wind up paying more.
“A corporate profits tax is just one part of reforms that are necessary to provide the revenue for public services that would allow all Ohioans maximum opportunity, regardless of where they live and whether they are Black, white or brown,” Schiller said. “Ohio lawmakers need to reinstate a tax on corporate profits.”