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.
Message to Ohio: Kill the CAT.
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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