Ohio's governor and lieutenant governor respond to the Wall Street Journal's "Texas v. Ohio" editorial:
March 7, 2008
Paul A. Gigot
Editor of the Editorial Page
Wall Street Journal
200 Liberty Street
New York, New York 10281
Dear Mr. Gigot:
We are writing in response to your March 3 editorial entitled “Texas v. Ohio.”
Your editorial ran the same day Ohio earned the 2007 Governorʼs Cup Award from Site Selection magazine. The Governorʼs Cup is awarded annually to the state that has the highest number of new facilities and expansions that meet at least one of three criteria – 1) involve a capital investment of at least $1 million, 2) create at least 50 new jobs, or 3) add at least 20,000 square feet of new floor area.
The award represents private capital investors voting with their money. It means that capital investors evaluated Ohio versus other states, completed thorough due diligence, weighed the facts, and most often decided Ohio was the ideal location for their capital investment.
Ohio has won the cup two years in a row. Not by opinion polls or historical databases, but rather by objective, tough to convince, hard-nosed business executives who donʼt like to make mistakes when it comes to large capital investments.
These executives are seeing a fundamentally improved Ohio business climate. In 2005, Ohio enacted the most sweeping tax reform in 75 years; reform that made Ohioʼs new capital investment tax rates the lowest in the Midwest. These reforms are designed to make Ohio companies even more competitive in the global economy and will ensure that Ohioʼs economy continues to be robust and vibrant throughout the 21st century.
In the March 3 editorial, Ohioʼs corporate tax rate was cited as being 10.5 percent based on a two year old set of numbers. Today, the actual effective corporate tax rate is only 3.6 percent. In two years, that tax rate will be zero, as Ohio will become one of only four states without a corporate profits tax. Ohio is also one year away from becoming one of only ten states without a tax on business tangible property (machinery, equipment, fixtures, and inventory). New machinery and equipment is already tax-exempt. Finally, Ohioʼs personal income tax is in the fourth year of a five year series of rate cuts that will reduce all tax rates by 21 percent from their pre-reform levels. In sum, Ohioʼs tax structure is much more business friendly than the editorial asserts. The bottom line: a company starting operations here next year will pay no tax on its tangible property and no tax on its profits.
Ohio also received a significant vote of confidence in the stateʼs fiscal management: recently Moodyʼs continued to rate Ohio bonds “Aa1;” and Fitch and Standard & Poorʼs gave Ohioʼs bonds a rating of “AA-plus.”
In Ohio, we believe in creating risk-sharing collaborative partnerships between the public and private sectors to create an even stronger state economy. We invite your readers to get the facts about Ohio by visiting www.OhioMeansBusiness.com.
Texas earned the Governorʼs Cup six times, certainly an impressive achievement, and they laid the foundation for their stateʼs remarkable economic growth. Ohio has now earned the Governorʼs Cup in back-to-back years. We are confident that our recent tax reform and our aggressive economic development efforts are moving Ohio to the head of the class.
Governor of Ohio
Lt. Governor of Ohio
Director, Ohio Department of Development