Richard A. Levin,
P.O. Box 530Columbus, Ohio 43215 U.S.A.
Bogus? No, the Tax Foundation’s index is worse than that.
By Richard A. Levin
My predecessor from the Taft administration, William W. Wilkins, once used theword “bogus” to describe the Tax Foundation’s annual ranking of state taxsystems.That’s a strong word. But, during the past four years, I’ve come to believe that Mr.Wilkins was probably being too kind.The blunt truth is that the Tax Foundation’s annual “state business tax climateindex” isn’t credible at all. Contrary to a recent
editorial (“Taxanalysis makes clear Ohio’s way behind,” Oct. 29), this index absolutely should not be taken seriously by policy makers or other serious-minded people.Here’s why. For starters, the Tax Foundation’s index contains a significant numberof factual errors. Among these mistakes (which I’ve described in more detail at tax.Ohio.gov/TaxFoundation/) is the Tax Foundation’s apparent confusion onwhether or not the state of Ohio actually taxes corporation profits.As most of your readers know, Ohio’s century-old corporation franchise tax cameto an end more than a year ago. This was an important tax reform; for the first time in decades, state government is no longer taxing the profits of manufacturers,retailers and virtually all other corporations.In one part of its report, the Tax Foundation acknowledges this achievement. But,in another section, the organization absurdly claims that Ohio imposes taxes of upto 3.4 percent on corporation profits.This shows an astonishing level of confusion about a key element of Ohio’sbusiness tax system. One can’t help but wonder: Are factual errors like this part of the reason the Tax Foundation consistently rates Ohio’s tax climate so poorly?Unfortunately, we will never know, because the Tax Foundation steadfastlyrefuses to fully disclose how it calculates its rankings. And this is the real reasonthat the Tax Foundation’s work simply cannot be taken seriously: The calculationsare done in secret.