June 28, 2006

New Honda Plant Will be in Greensburg, Indiana — NOT in Ohio

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 3:45 pm

Here’s the news.

Why?

Here’s one theory:

  • Indiana eliminated its gross receipts tax on businesses a few years ago.
  • Ohio just established and is the process of fully phasing in a Commercial Activities Tax (CAT), which is in essence a gross receipts tax.
  • If it had located the new plant in Ohio, shipments from the Honda plant to dealers would be CAT-taxable sales. The tax would have to be paid regardless of whether the plant, or the company, was earning a profit.
  • Indiana does have a corporate income tax (which Ohio is phasing out), but it would only have to be paid if the plant is making money.
  • Honda is probably already unhappy that shipments of cars from its existing Ohio plants to dealers are CAT-taxable, and didn’t want to add any more to what they will have to pay in the coming years on Ohio shipments.

Advantage: Indiana.

Message to Ohio: Kill the CAT.
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UPDATE (HT NixGuy): The Columbus Dispatch article on Honda’s decision mentions workers’ comp costs as a possible factor. Ohio’s WorkComp benefits are more generous than Indiana’s. That’s not surprising, as it’s a government agency, and “more generous” probably means “too generous.” Solution: Privatize Workers’ Comp, and have private insurers sell varying degrees of coverage (with mandated minimums, of course).
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Previous Post: Nov. 14, 2005 — This CAT Should Be Killed

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4 Comments

  1. Class A post and analysis!

    Comment by Porkopolis — June 29, 2006 @ 10:32 am

  2. And it looks like Ken Blackwell has already taken your recommendation to privatize Workers Comp: Ken Blackwell’s Honda Press Release

    Comment by Porkopolis — June 29, 2006 @ 11:20 am

  3. #1 and #2, thanks.

    As to privatizing WC, if this is the first time Blackwell has proposed it, maybe I should get a percentage of savings achieved by the state and employers after privatization occurs (haha). I have gotten some visits from KB.com in the past day.

    I’m reading today that Honda didn’t want to have too many of its facilties in OH. This strikes me as an excuse; Honda has plenty of facilities in other states.

    Comment by TBlumer — June 29, 2006 @ 11:58 am

  4. What a difference a state makes!

    For several weeks, we’ve known that a site in Indiana and a site in Ohio were finalists for a new Honda factory. On June 28th, it was revealed that Indiana’s location (about halfway between Indianapolis and Cincinnati) was chosen.

    UPDATE:

    Bizzy…

    Trackback by Generic Confusion — July 6, 2006 @ 10:17 pm

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