Ohio Tax Reform

The Corporate Franchise Tax (CFT) was eliminated in HB 66. The CFT is being phased out at a rate of 20 percent per year, with elimination of the tax slated for 2010. This means that in 2007, businesses are only paying 60 percent of the calculated tax. The Commercial Activities Tax (CAT) has replaced the CFT.

The CAT is a new tax on any business that generates more than $150,000 in taxable gross receipts. Businesses generating less than $150,000 have no CAT liability. Those generating between $150,000 and $1 million pay a CAT of $150. Those generating more than $1 million pay .26 percent (.0026) of taxable gross receipts.

*Something to think about: the General Assembly included in the CAT a provision that required a rate adjustment if the taxes generated exceeded 10 percent (over or under) of the revenue estimates. The CAT is currently generating approximately 20 percent more than anticipated, so the rate should be decreased in the next budget.

Personal income taxes were cut by 21 percent (across the board). The rate reduction was phased in over five years, at a rate of 4.2 percent per year.

*Note: Because of the performance of the economy, an executive order increased the phase-in rate. Today, we are three years (rather than two) into the reduction.

The Tangible Personal Property (TPP) has long been considered a major impediment toward business expansion. The TPP tax, which is assessed on three major categories: manufacturing machinery and equipment, furniture and fixtures, and inventory, was especially onerous on the manufacturing industry. The Phase-Out reduced the tax rate from 25 percent to 18.75 percent (in 2006). The rate will fall to 12.5 percent in 2007 and 6.25 percent in 2008, with elimination of the tax by 2009. Purchases made after January 2005 are all exempt from the TPP.

Senator Tim Grendell 2/07

Breathing in Northeast Ohio

Breathing in Northeast Ohio may be hazardous to your health. The Northeast Ohio Areawide Coordinating Agency (NOACA) is trying to fix that, and could use your help.

Little particles floating through Ohio’s air get sucked into our air passages daily. They are mostly soot from burning coal or diesel fuel. It’s not the pieces you can see floating through the air that are a problem, which are usually filtered by your nose and throat anyway. It’s the invisible microscopic particles that are settling into your lungs to stay a while and possibly cause or aggravate asthma, lung diseases and heart problems; not to mention that some particles could also hold metals and metal oxides.

Most of this particulate matter (with the worst troublemakers called PM2.5, from their size of 2.5 micrometers) comes from burning coal in our power plants and from burning gasoline and diesel in vehicles, generators and the like. Coal, gasoline and diesel are fossil fuels.

The U.S. EPA has declared seven counties of Northeast Ohio as being "out of attainment" under the Clean Air Act for these small PM2.5 particles.

Potential solutions include plug-in power at truck stops to reduce diesel emissions while truckers sleep and anti-idling restrictions; renewable power options such as wind and solar are also under discussion. Technology and regulatory suggestions such as these will go to the Ohio EPA as recommendations for its State Implementation Plan. If adopted, Northeast Ohioans will see these beneficial suggestions become a reality and can begin breathing healthier, cleaner air.

Cleaning up PM2.5 by reducing and replacing fossil fuel burning also reduces carbon dioxide, our most notorious greenhouse gas. This curbs acid rain by reducing sulfur dioxide and nitrogen oxide emissions. It also reduces mercury emissions that are getting into our Lake Erie and Ohio stream fish, threatening brain development of our youngest Ohioans. You can help by contacting public officials to promote funding and tax breaks for renewable power, alternative fuels and hybrids, and energy efficiency; and for regulations to reduce fossil fuel emissions.