As foreclosures continue to ravish cities and small towns across the country, companies downsize or restructure to stay financially afloat and families struggle with the high cost of food and gasoline, it is easy to understand why many Ohioans have a negative outlook on the state's economic future. Unfortunately, the impact of these economic woes has hit folks in the 17th District particularly hard, and I will continue to do everything I can to help those in need. At the same time, the General Assembly has taken a number of steps in recent years to build a foundation for Ohio's long-term economic success, so I am confident that our region and the entire state will experience brighter days ahead.
In 2005, recognizing that significant moves needed to be made for Ohio to compete for business investment and jobs in a global economy, the Legislature approved one of the most sweeping tax reforms in our state's history. The package includes a 21 percent income tax cut for Ohio taxpayers to be phased in over five years; the eventual elimination of the state's tangible personal property tax on businesses' inventory, machinery and equipment and furniture and fixtures; and the abolition of the Corporation Franchise Tax over five years. In their place, a new broad-based, low-rate Commercial Activities Tax (CAT) was implemented, creating a fairer, simpler and more business-friendly tax structure in Ohio. The hope is that these changes will translate to lower operating costs for Ohio-based businesses, so they have more money to purchase machinery and equipment to increase productivity, invest in infrastructure and expand their workforce.
While it will take time for the full benefits of tax reform to take hold, there is evidence that it has already begun to have an impact on our economy. Recently, the Ohio Business Roundtable -- a partnership of CEOs from the state's major companies -- issued a report, Ohio tax reform: Year 2 in review, which details the progress that has been made in reducing the tax burden on several sectors of Ohio's economy, while attracting millions of dollars in new capital investment.
For example, there were more than $7 billion worth of new private investment projects announced or started by Ohio companies last year. That is up from $3.8 billion in 2005 and $5.9 billion in 2006. These gains were recognized in March as Ohio won the 2007 Governor's Cup for leading the nation in the number of new and expanded business facilities with 399 projects, surpassing states like Illinois, North Carolina, Texas and Michigan. To qualify, a project must involve at least $1 million in capital investment, create no less than 50 jobs or add at least 20,000 square feet of new space. It was the sixth time Ohio has received the award, which is presented by Site Selection Magazine.
At the same time, the Federation of Tax Administrators published a report recently, which ranked Ohio's per capita state tax burden 38th in the nation, marking a significant decline from 2005 when we were 27th on the list. Once tax reform is fully implemented, Ohio's new capital investment tax structure will be the lowest in the Midwest, putting the state in a tremendous position to attract more development and jobs to our communities. In fact, according to the Business Roundtable report, the tax burden on the state's manufacturing sector will be 55 percent less in July 2010 than it was in June 2005. Not to mention, taxes for several other areas of Ohio's economy will drop dramatically, including agriculture-related businesses (58 percent), biotech (71 percent), polymers and chemicals (70 percent), automotive (62 percent), professional services (42 percent) and logistics (63 percent).
While I recognize that it is hard to stay optimistic during these difficult economic times, I believe that through passage of tax reform and other important accomplishments, the General Assembly has put Ohio on a path that will lead to long-term success. The Ohio Business Roundtable report is evidence that we are making progress in this effort. In the meantime, I will continue to make business growth and job creation a top priority for southern Ohio and communities all over this great state.
As always, I welcome your views on state issues. If you have any questions, thoughts or concerns, or if you need assistance working with a state government agency, please write to me: Senator John A. Carey, Ohio Senate, Statehouse, Columbus, Ohio 43215, or call my office at 614-466-8156.
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