What does HB59 Mean To You and Your Business?

I just participated in a conference call with the Ohio Chamber of Commerce regarding Governor Kasich's proposed Tax Reform in HB59.

There were several items that they covered, but I wanted to share two areas in this proposal that will have a major impact for individuals and businesses in Ohio.

The first one is in the area of Personal Income Tax.  Starting in 2013, the proposed bill will implement a 20% income tax reduction over a three-year period. This applies to all 9 of the different income tax brackets.  Here is the breakdown for the reduction:

2013 - 7.5% reduction
2014 - 7.5% reduction
2015 - 5% reduction

In addition to the above 20%, there will be an additional 4% reduction in 2013 which will be funded through the Income Tax Reduction Fund.  This is a one-time reduction.  So in essence, you will receive a 11.5% reduction to your personal income tax in 2013 only.

Now let's move on the the changes in the Sales Tax Expansion.  In the proposed bill, ALL services are automatically subject to the Ohio Sales & Use Tax unless an exemption is agreed upon.  So what is a service?  It is an act performed for another person/business for a fee.  Under the current draft of the bill, there are 11 exceptions to these services:

1. Medical/Health care services
2. Education & tutoring services
3. Real property construction services
4. Residential leases
5. Insurance transaction
6. Adult & child day care
7. Social services
8. Mining
9. Residential trash pick-up
10. Employee services (except 1099 is subject to the tax)
11. Funeral services

All other services will be subject to this tax like advertising, getting your hair cut, attending sporting events, etc.

This expansion also includes expanding sales tax to intangible services like trademarks, patents, licences, selling of mortgages, etc.  And it will also include a sales tax on all digital products like downloads (think of all apps purchased on Apple products).  In this bill, there is a proposed decrease in the current state rate of 5.5% to 5%.    These changes would take place September 1, 2013.

HB59 has many more items included that I didn't mention here including the Oil & Gas Severance Tax, the addition of a Small Claims Division under the Board of Tax Appeals and the reduction of income tax to be paid by businesses that are set up as pass-thru organizations (sole proprietorship, partners, LLC, Etc.)

The budget bill must be in place by July 1, 2013.  So between now and mid-April, this bill will be flushed out in the General Assembly. It is scheduled to be on the House floor on April 18. I urge you to contact your legislators if you have an opinion on this proposal and other issues.  For a map of House Districts in Ohio, go here.

If you have any questions about the above information, please feel free to contact me anytime - Cheri Hottinger 740.345.9757 x5 or chottinger@lickingcountychamber.com.

Spirit of Enterprise Award

Congratulations to the following Ohio members of Congress on receiving the coveted Spirit of Enterprise Award handed out by the U.S. Chamber of Commerce:

Senator George Voinovich
Rep. Jean Schmidt
Rep. Michael R. Turner
Rep. James D. Jordan
Rep. Robert E. Latta
Rep. Steve Austria
Rep. John A. Boehner
Rep. Patrick J. Tiberi
Rep. Steven c. LaTourette

This award is given for voting in favor of jobs and economic growth in the second session of the 111th Congress.  To see how your elected officials voted on key issues, visit www.uschamber.com/soe.

Congressional Visit

Yesterday Congressman Pat Tiberi visited with our Board of Directors and our Government Affairs Committee for a nice lunch and discussion.  I always appreciate the time our elected officials spend with their constituents.

Kurt Harden, member of the Government Affairs Committee and Past Chairman of our Board, summarizes our meeting yesterday on his personal blog, Cultural Offering.  Drop by and pay him a visit.  You will always learn something new.

And the Protesting Continues

And the protesting continues at the Statehouse today.

Interview with Speaker John Boehner

Finally sifted through my mail today and came across this interview the US Chamber did with Speaker of the House John Boehner.

Excerpt:

Q: How do we pay down our debt?

A: First of all, the discretionary spending side is about one-third of our budget. We just need to look at every single line item of the budget and ask ourselves, 'When you're borrowing 40 cents for every dollar that you're spending, do we really need to do this?' But that's only one-third of the problem. The big problems are the growing unfunded entitlement programs - Social Security, Medicare, and Medicaid. And you'll see us this year begin to develop proposals for how we strengthen those programs for the long term.

The Elimination of Ohio's Estate Tax

Hot off the presses:


House GOP Introduces Bill to Eliminate Ohio’s Estate Tax

COLUMBUS—Assistant House Majority Whip Cheryl Grossman (R-Grove City) and State Representative Jay Hottinger (R-Newark) today jointly introduced legislation to eliminate the Ohio estate tax, also known as the “death tax.” House Bill 3 will allow small business owners, farmers and homeowners to rightfully pass on their assets to their heirs without fear of being taxed twice on their life’s savings, which will make Ohio more competitive for entrepreneurial growth and investment.

“House Bill 3 is just one of the many ways we will be working to aggressively improve the way the state of Ohio does business,” said Rep. Grossman. “When you hear of the 400,000 jobs that have left the state of Ohio, 90 percent of those have gone to other states—not overseas. We need to be more business-friendly, and I think that this legislation is a huge step in the right direction for the people of Ohio and for the generations to follow.”

“We are beginning the process of ending a fundamentally unfair and egregious tax, a tax that is often the case of double taxation,” said Rep. Hottinger. “This bill is about restoring fairness to Ohio’s hardworking citizens, our families, small business owners, as well as our state’s farmers. Ending this tax will have a tremendous effect on job creation in the state of Ohio.”

Ohio currently has the lowest estate tax exemption in the United States. Only $338,333 of the taxable estate is exempt from the estate tax, compared to an average exemption amount of approximately $1.7 million for other states that have an estate tax. For this reason, supporters of the elimination of the estate tax believe that it takes direct aim at Ohio’s middle class, undermines job creation, and discourages saving and investing in the state.

“The estate tax represents essentially a 7 percent incentive for capital to not come to Ohio or to leave Ohio,” said Jack Boyle, executive director of the Ohio Prosperity Initiative. “[House Bill 3] is the beginning of Ohio making its step back to competitiveness. We’ve had a 30-year slide of our state’s economic fortunes, and this is the day that we start changing that.”

“The Ohio Farm Bureau has long stood as an opponent of the estate tax,” said Beth Vanderkooi, director of state policy for the Ohio Farm Bureau Federation. “We’re very excited that Representatives Grossman and Hottinger are going to try to [enact this bill] in Ohio this year, and we’re strongly behind that.”

House Bill 3 was assigned to the House Ways and Means Committee, where it will undergo further consideration.

Thank you Representatives Grossman and Hottinger.

Health Care Repeal Underway

Today I participated in a conference call with the US Chamber regarding the initiative to repeal the Health Care Bill previous passed.

Next Wednesday, January 12th, HB 2 -a Bill to repeal the Health Care Reform Bill, will be voted on in the House of Representatives. This vote is an up or down vote, no amendments allowed.

Due to the large number of freshman congressmen who campaigned on repealing the Health Care Bill, support for this bill is strong. And interestingly enough, it is only two pages long.

HR 144 will also be voted on next week. This is a Resolution to repeal the 1099 reporting requirements which were snuck into the Health Care Reform Bill. There are 108 co-sponsors of this Bill and it also has strong support.

I am pleased to report that Congressman Pat Tiberi (12th District) not only supports HB 2 and HR 144, but is a co-sponsor of both.

I haven't heard back from Congressman Bob Gibb's (18th District) office yet, but will update this blog when I do.

Ohio Needs Your Help

Governor-Elect John Kasich has a website called Fix Ohio Now.

This site features a short video from John and asks for your help and ideas on a number of items including:

• Ideas on how to fix Ohio
• Report corruption
• Report government waste
• Report over regulation

You can even send them your resume.

So let your voice and ideas be heard.

Sarah Wallace and Community Banks

Have you heard about Sarah Wallace's letter in the Wall Street Journal? If not, go here.

And also courtesy of Patrick, watch this response:

Quote of the Day

". . .but that would then kick you out of your grandfathered status".

- Caroline Fraker, Vice President of Compliance, MedBen

We held a Lunch & Learn today on the Health care Reform Bill and our presenter, Caroline Fraker, did an excellent job trying to explain a complicated subject.

One item she covered was what employers can and can't do in order to have a grandfathered plan, which I thought was very interesting, considering many of the new regulations seem to contradict each other, thus the quote of the day (which she said at least four times during the hour-long session).

Nice job Caroline.

Ohio is No. 29

A recent study done for the U.S. Chamber of Commerce by Harris Interactive Inc. shows that Ohio is generally in the middle.

The overall ranking of State Liability Systems for the years 2002 - 2010 have Ohio at No. 29. Not great, but could be worse.

Some other rankings for Ohio:

1. Overall treatment of tort and contract litigation - 27th
2. Having and enforcing meaningful venue requirements - 16th
3. Treatment of class action suits and mass consolidation suits - 18th
4. Damages - 28th
5. Timeliness of summary judgment/dismissal - 38th
6. Discovery - 30th
7. Scientific and technical evidence - 25th
8. Judges' impartiality - 26th
9. Judges' competence - 28th
10. Juries' fairness - 32nd

We Don't Always Agree. . .

I must admit that I tend to support the same legislation that my husband (State Representative Jay Hottinger) supports. We tend to have the same philosophy about the size and scope of government. But below is a great example that demonstrates that we are not clones.

I was reading his latest news column entitled "Why Jobs Leave Ohio" (see below). It is basically about two bills that have been introduced in the Ohio House that he is supportive of. Both basically require that two departments within the State run certain reports to share with the legislators. I questioned him about these two bills. I asked him why in the world would you create a law that mandates a department run a report? His answer was because they don't do it now and the current Governor doesn't require it, so they don't have access to the information.

This is one reason why government frustrates me. HB337 would require the Ohio Department of Development to basically conduct an exit poll when companies leave Ohio. Why does this have to become a law??? Shouldn't they be doing this anyway??? Every time the Chamber loses a member, we ALWAYS find out why.

To have to legislate things of this nature is absurd.

Here is his news release on these two bills: (wouldn't you hate to be married to me?)

News column by
State Representative Jay Hottinger


WHY DO JOBS LEAVE OHIO

State agencies and social service organizations across the state are working hard to meet the immediate physical needs of Ohioans, but the only long term solution is to get people employed in quality jobs so they are able to meet the needs of their families. The lack of jobs can be directly traced to companies that move, close, or downsize, but unless Ohio legislators know why a company relocates or goes out of business it is very difficult to effectively combat closures and relocations, or encourage additional hiring.

I believe that the crux of the problem is that companies leave Ohio, or close down, for a host of reasons. A family business may have no viable successor to the company founder and it is simply sold to a competitor or closed. Sometimes the state tax burden may prove too much to bear, other times it might be the local tax burden. Other times another state offers an incentive package that lures the company to another location, or a legal suit causes the company to go into bankruptcy. Sometimes different cities and counties will poach businesses from one location within Ohio to another. I would hazard a guess that many times a company closes purely because it cannot find enough customers to remain viable. In order to effectively help create an environment in Ohio that is conducive to commerce and hiring it is important that the General Assembly understand why businesses hire employees or leave Ohio. Toward this end two proposals have been introduced. The first is House Bill 346 which was introduced jointly by State Rep. Terry Boose and State Rep. Dave Hall. House Bill 346 will require the Ohio Department of Job and Family Services to submit to the Ohio General Assembly a report on job placements and to also make the report publicly available on the Job and Family Services website. It is hoped that we will be able to better understand from this data why companies hire employees so that the Legislature can support those factors that result in hiring.

The second piece of legislation is House Bill 337which will require the Ohio Department of Development to track and report information on companies that leave Ohio. This bill was introduced by State Rep. Nan Baker and State Rep. Terry Boose to help the government better understand what drives jobs away from Ohio. While we know that taxes, overbearing regulations, and bureaucratic hoops are frustrating and expensive to comply with, we do not know what issues are the most problematic or affect the most businesses so that they can be remedied. House Bill 337 would require the Ohio Department of Development to collect some general information on the departing companies such as their former location in Ohio, their new location out of state, and what the company contributed to the Ohio economy as far as wages, taxes, and such things. It would also request that the company share why they left Ohio, though Ohio could not force them to divulge this information. The results of these questions would then be used to make Ohio a better place to work and do business.

Both of these bills are currently awaiting hearings in the Ohio House of Representatives Economic Development committee. While they would provide valuable information to the state for a relatively minor cost they have to date seen very little action and do not appear to be slated for passage. Without accurate information it will be very difficult for the legislature to craft fixes to state issues that plague our business base and drives hundreds of thousands of jobs out of state.

As always, I welcome your questions, comments and input on state government issues. Please feel free to contact me by mail (State Representative Jay Hottinger, 71st House District, 77 South High Street, Columbus, Ohio 43215), by email (district71@ohr.state.oh.us) or by phone (614-466-1482).

- Posted by Cheri Hottinger

Is This "Pushing the Limit"?

Check out this sign posted at a doctor's office in Orlando, FLA:

You can read the story here.

Thanks Todd.

- Posted by Cheri

Voting Begins Today

Today, March 30, marks the first voting day for the May 4 election; absentee voting has now begun.

If you haven't already registered for an absentee ballot or need more election day information you can find it here.

As a reminder, the Chamber has endorsed State Issue 1 - renewal of the Third Frontier Program as well as the 1-mill operating levy for C-TEC.

Health Care Timeline

What a mess. You can click on it to enlarge it for easier reading.

Told You So

The article below was written back in January of 2009 regarding Obama's Stimulus Plan. I think it is a safe bet that Professor Armentano is saying "told you so".


The Independent Institute Commentary

The Obama Stimulus Plan Won’t Work

January 22, 2009
Dominick T. Armentano

Houston Business Journal, Austin Business Journal, Providence Journal, San Francisco Business Times

President Barack Obama and his economic team will soon attempt to convince Congress that spending upwards of $1
trillion tax dollars (more or less) will shorten the recession. A good part of the spending will be on public works and
infrastructure projects that aim to create (or save) many millions of jobs. Some of the spending will be in the form of
grants to state governments to prevent cutbacks in education and medical services. And a smaller (and laudable) part of the program provides tax relief to some individuals and corporations.

Although some economists supported the bank and auto bailouts and although many more support a major federal
stimulus package, this economist holds that both measures are counter-productive. Both are likely to prolong the
economic slump and not shorten it.

This may seem harsh but the ultimate cure for a recession is recession. Economic booms malinvest labor and capital and recessions are necessary to clean out these malinvestments. Declining prices allow consumers to more easily purchase products (homes, autos) in excess supply; inventories are reduced and supply and demand are brought into balance. And declining profits weed out business organizations and managers that have invested poorly during the boom; bankruptcy allows resources to flow to more profitable areas of the economy. A sustainable recovery is now possible. It should be obvious that random bailouts can short-circuit the recovery process by propping up poorly performing companies and slowing resource reallocation. With tens of billions in lost profits, General Motors and Chrysler have demonstrated vast inefficiency; yet taxpayer bailouts will preserve their poor management and high-cost union jobs. Worse, other more efficient automobile suppliers will lose sales to Detroit’s dinosaurs and may themselves require subsidies. It just never ends.

The case for bailing out spendthrift state governments or for additional infrastructure spending is equally flawed.
Supporters constantly argue that “since consumers won’t spend, governments must spend (to create more jobs).” And
since it’s claimed that there are vast unmet public sector needs, what better time to undertake major road construction or help state governments fund programs such as Medicaid.

Some public policies are wrong in both theory and practice; infrastructure spending and bailing out state governments to shorten recessions are examples. In theory, the money to fund the stimulus will have to come from either massive federal borrowing, substantial tax hikes, or pure money inflation by the Federal Reserve. But none of this can remotely promote recovery in the private sector of the economy. All it will do is substitute some private/public sector jobs in one part of the economy for other private/public sector jobs in another part of the economy.

Public spending on major infrastructure projects to fight recession is especially problematic. (Think “Big Dig” in Boston.) Which programs will be undertaken? In which congressional districts? And where will the labor resources come from? Supporters of public works automatically assume that the current increase in unemployment provides a vast army of workers to fill new jobs. Not so fast.

Unemployed workers with vastly different skill levels are scattered unevenly throughout the economy. It is simply
unimaginable that even a tiny percentage of them would have the proper skill requirements or would relocate to the
politically determined infrastructure projects. In addition, these projects require extremely long lead times (sometimes
many years of permits and planning) and are unlikely to begin soon enough to have any near-term effect.
The experience in the 1930s is instructive. Even though federal government spending increased from $9.8 billion in 1934 to $14.2 billion in 1940, the unemployment rate in 1940 was still a staggering 14.6%. A 45% increase in New Deal spending in six years did not end the Depression.

Contrary to economist Paul Krugman and others, the federal government cannot spend us out of our economic quagmire. The best that the government can do is not make things worse. We don’t need more corporate or state bailouts and we don’t need vast public works programs costing many hundreds of billions. We do need more prudent private and public spending, lower taxes on income and investment, and a responsible monetary policy from the Federal Reserve. And we still need lower prices and bankruptcies to finally correct the mistakes of the boom.

Dominick T. Armentano is professor emeritus in economics at the University of Hartford (Connecticut) and a research
fellow at The Independent Institute in Oakland, Calif. He is author of Antitrust & Monopoly (Independent Institute,
1998).

Thanks for the look-back Todd.

Thank You Congressmen Space and Tiberi

Licking County is split basically down the middle in terms of congressional districts, so we have two Congressmen who represent our area: Congressman Zack Space (D) and Congressman Pat Tiberi (R).

Both were "NO" votes on the Health Care Reform bill that passed the House late last night.

Thank you Congressman Space and Congressman Tiberi.

Welcome Home Gift

How ironic it is that I just returned home from a communist country only to find that our Congress just passed the so-called Health Care Reform bill.

Read the winners and losers here.

There is a reason why we live in the best country in the world. It is call freedom. Our country was founded on certain principles, which included a very limited form of government.

We just took another step backwards with the passage of this bill. I am gravely disappointed.

- Posted by Cheri

Unemployment Colors - Black is NOT Good

Check out this video on the changes in our country's unemployment rates by county since January 2007:




For a closer view, go here.

Thanks Mark.

- Posted by Cheri

Third Frontier (Issue 1) Needs Your Support

Today, the Licking County Chamber of Commerce unanimously endorsed State Issue 1, otherwise known as the Third Frontier program. This issue will appear on the May 4th ballot.

Get the rest of the story here:

http://www.lickingcountychamber.com/newsdetail.asp?news_id=144

- Posted by Cheri