A broader look at Ohio’s tax system

Buckeye Farm News

“Tax issues are always a top concern for our members and with the recent attention on CAUV, elimination of the 10 percent and 2.5 percent property tax rollback for new and replacement levies, cuts in local government funding and talks of further cuts in the state income tax, we felt this was a good time to take a broader look at Ohio’s overall tax structure, focusing on the different state and local taxes that farmers pay,” said Chad Endsley, Ohio Farm Bureau’s general counsel. “There have been several proposals over the last few years on different ways to revamp Ohio’s tax structure, and we need to make sure that we are able to be part of that discussion and to come at it from an educated and well-prepared point of view.”

During an Ohio Farm and Food Leadership Forum panel Dec. 10, Howard Fleeter touched on preliminary results of his research as well as explained why Ohio’s property tax funding system is so complicated.

For the OFBF study, Fleeter is looking at how much agriculture has paid in local property taxes, state personal income taxes, school district income taxes, corporate franchise taxes, commercial activity taxes and estate taxes over a 20-year time frame. A final report is expected to be released in a few weeks.

“If you feel like you’re getting hit every time you turn your head, it’s not your imagination,” Fleeter told the farmers attending his panel discussion. “Agriculture and residential properties have gone from paying less than half of the property taxes in 1975 to almost 70 percent in 2011. That’s a very substantial change.”

Fleeter explained that Ohio used to have a simpler tax structure, but that changed in 1976 when House Bill 920 was passed to protect real property from inflationary increases in property taxes. A constitutional amendment in 1980 led to even more changes. Agricultural and residential properties were lumped into one category, Class 1.

“Ohio has one of the—if not the most—difficult property tax structure in the country,” he said.

Since 1976, property taxes for agricultural and residential properties have not changed much but they have been drastically cut for business properties, including the phase out of tangible personal property taxes on general businesses and utilities.  While businesses have seen an increase in other types of taxes, specifically commercial activity taxes paid to the state, the changes have resulted in a higher percentage of the property taxes that fund local government being paid by agricultural and residential property owners.

Relevant Ohio Farm Bureau tax policies:

•We believe that revenue to the state should be received through the following continuum of taxation from most palatable to least palatable: 1. the income tax; 2. the state sales tax; 3. the Commercial Activity Tax (CAT); 4. property taxes.

•Additional revenue, if needed, should come primarily from the personal income tax and, under some circumstances, from an increase in sales and use tax rates, rather than from eliminating (sales and use tax) exemptions.

•We support use of the optional local school district income tax in preference to property tax.

•We support the continuation of the agricultural sales tax exemption.

•We support the use of a statewide sales tax and/or income tax to fund education in place of increases in real property tax.

•We oppose any rate increases in the current Commercial Activity Tax (CAT), as well as any increases in the administrative fee.

•We oppose any effort to reinstate a State of Ohio estate tax.

 

New tax policies adopted at 2014 annual meeting:

•We support reinstating the 10 percent and 2.5 percent property tax rollback for new and replacement levies.

•We support nonpermanent agricultural structures being treated as personal property and not taxed as real property

 

As Ohio Farm Bureau’s policy staff members take a closer look at Ohio’s taxes, they will be sharing their findings with members through a series of informational articles that will appear in Buckeye Farm News and the e-newsletter. We hope these will help be informative for county policy development discussions. 

To get the latest updates, sign up for the e-newsletter. The e-letter is for Ohio Farm Bureau members only.

 

Percentage of 1991 school taxes paid by class of property:

48%: Residential & agricultural property

20%: Business real property

19%: Business tangible personal property

13%: Public utility tangible personal property

 

Percentage of 2011 school taxes paid by class of property:

70%: Residential & agricultural property

24%: Business real property

6%: Public utility tangible personal property

Lynn Snyder 

Lynn Snyder is senior director of communications for Ohio Farm Bureau.