State of Ohio Sales Tax Holiday

HAM
RADIO

OHIO

   Northern Ohio
Amateur Radio Development
P.O. BOX 271, Brunswick, OH 44212-0271
   www.noard.com
Rick Wells - K8SCI     PH: 330 225-7373

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OHIO-TAXES

NOARD INC ( formerly Northern Ohio Amateur Radio Depot ) no longer
has a retail store, and is no longer in business.
Northern Ohio Amateur Radio Operators please pass on the word to others.

Dear State of Ohio
TAKE YOUR TAX HOLIDAY AND SHOVE IT!

November 18, 2001

TO: The State of Ohio
          Governor, Bob Taft
          All House Representatives
        State Senators (w/e-mail addresses)

The most often used basis, to determine whether a person is
successful, is their income. Most individual incomes are derived
from, businesses. Only by earning a reasonable income, can an
individual establish a "goal" to bring into their life (or their families
life) a desired "standard-of- living". In most cases, the individual
relies on "employment" to produce the needed income.

Businesses, of all types, provide employment for those individuals.

They compete with other businesses that manufacture, service or
provide within their intended market. What determines whether a
business can exist is its ability to adjust to technology and market
changes that effect its products or services. Doing so while still
being able to produce reasonable profit and being competitive with
their competitors.

The strength of the economy requires people to be employed, in
good paying jobs, while businesses remain financially strong. Two-
Thirds of the U.S. economy is driven by the consumer. The consumer
determines (in reality) what businesses remain, and which ones don't.

Often, many of those businesses, especially in direct consumer retail,
are put in an unfair basis with local consumers. This directly effects
the business ability to compete, while remaining financially able to be
economically solvent.

State tax laws, created to increase the needed State, County and City
revenues, impact businesses only within that State. That often,
unfairly, weakens the ability of that business to compete in a
national consumer market place with the local consumer. While State
Governments should be making every effort to strengthen their ability
to perform sound Government services, they are failing to react to
changes in consumer choices. This is unfairly weakening retail
businesses within their own State.

State Government taxation caused "just-in-time-delivery". Large
companies, which had large inventories, were forced to pay millions
of dollars of property taxes on the inventories that they stocked.

Those taxes were required to be paid, even if that company was in
a declined sales/manufacturing situation. Moneys going for property
taxes could have been spent on updating facilities, to keep the
business competitive, rather than weakening its financial strength,
which could cause the entire business to collapse, losing all jobs,
and all the income-taxes that were associated with those employees
of that business.

This property tax on inventory also severely hurt the retail stores
ability to be competitive. It severely strains the financial decisions
to stock inventory, since, if the inventory does not sell promptly,
they have to pay property tax on it. Example, one of my customers
wishes to make a $300 purchase of an item in which I am required
to purchase $3,000 minimum, from the manufacturer. Even though
I will have a $300 sale, I would be left with $2,700 of potential
inventory that I would be subject to personal property tax. I am
more concerned about taking $3,000 of the businesses assets and
potentially locking $2,700 of that capital into a situation of paying
higher property taxes as a result. If the property tax didn't exist, I
may consider making the $3,000 purchase with the hopes of
generating additional sales as a result of having the inventory
available for sale.

In reality, the personal property tax on inventory punishes me to
stock merchandise to make it available for a local consumer. Do
you think I enjoy selling something for less than what I paid for it,
because the Sales Tax made me non-competitive, and I fear that
I'll have to pay property tax on it as well? I have many times sold
inventory, below cost, in which I have already paid property tax
on that item several times.

Even though the State of Ohio laws destroy my cash-flow, by
making me non-competitive with local consumers, God forbid if
I'm ever late with a Sales-Tax or Property-Tax payment. Post-
Marks (excepted by the Federal Government) are not accepted
as a means to determine timely payments, by the State of Ohio.

All penalties and fines are designed to destroy the business, for
good.

The other down sides of property tax is:
1.) It takes away money, that could be used to stock other
     inventory items that could increase my overall sales, with
     local consumers, thereby, increasing the business income
   profits.
2.) It reduces the overall ability to pay employees additional
     wages (or benefits), which lowers the potential employees'
     income taxes.
3.) It reduces the overall income for the business itself, and its
   financial overall strength to remain solvent.

All businesses need ongoing "cash-flow" to remain solvent.

Cash flow is a daily handling of orders/sales in which the
business uses to pay overhead, wages, and to purchase
additional inventories to generate future "cash-flow". It is up
most important that this "cash-flow" remains available to the
business, or, the business could easily be forced into a
situation that it couldn't survive, due to insufficient funds. Keep
in mind that overhead remains the same, even if the business
is going through slow times.

Two-Thirds of the U.S. Economy is controlled by the consumer.

Consumers have learned to shop very wisely. They have far
more information available to them through the use of national
magazines and the internet. The total cost to them, "out-of-pocket"
to obtain a particular item, is what they will use to decide where
they are going to spend their money. Large out-of-state retailers,
with high-volume discounts, offer low prices, "free-shipping", and
NO-TAX as incentives to Ohio consumers to encourage them to
shop out of Ohio.

Unfortunately, the State of Ohio, requires businesses to charge
and collect the Ohio Sales-Tax, which, increases the "out-of-pocket"
cost to the local Ohio consumer. Unfortunately, the State of Ohio,
has no way to monitor sales, made by out-of- State retail businesses
(large and small), made to Ohio consumers, to collect Use-Tax.

The "Streamline Sales-Tax Plan" with the Multi-State Tax Commission,
will only hurt the current "out-of-state" business that Ohio retailers are
currently receiving from "out-of-state" consumers. The U.S. Government
has already stated that any retailer that falls below $5,000,000 in annual
sales is exempt from participation in the program.   Five States have
no sales/use-tax as a part of their taxation revenue methods and would
have absolutely no incentive to participate in the program. This 5 million-
dollar exemption means that there will always be smaller out-of-state
retailers that will be able to undermine pricing for local retailers with the
local consumers who desire to avoid the tax. Perhaps the intention of
the $5,000,000 exemption is deliberate so that it can foster growth
potential for that firm. Why is that acceptable, at the expense of
weakening other small retailers, here?

Even current Ohio Sales/Use-Tax Laws, already in place, do not
function with the current methods of consumer decisions. Large
retailers, such as Target, which has nexus in Ohio, have already
established "on-line" stores, which generate ZERO taxes for the
State of Ohio (see target.com). Many more companies will set up
large facilities to handle the desire of the Ohio consumer to avoid
the Ohio Sales-Tax, and they will do it from States that do not
participate in the Streamline Sales-Tax Plan. The Sales-Tax itself
is the savings that many consumers are saving causing them to no
longer spend their money in the local retail stores.

That reduction in the money spent in the local retail store is causing
severe "cash-flow" problems for local retailers.

It is ironic, every time a major business makes a decision to close a
store (recently, Dillard's at downtown Cleveland, CVS drug stores,
Office Depot, etc.) the news reports seem to be only concerned
about:
    1.) The loss of jobs (income for the employees).
    2.) The loss of lease revenues (incomes for the landlords)
    3.) The effect that it may cause to other businesses that may be
         affected in the area (which may cause other businesses to close).

Every report has to do with loss incomes and jobs. The news reports
never mention anything to do with the loss of Personal Property tax
and Sales-tax revenues that the County and State were receiving from
that business. It's like those were not important issues, but the loss
of jobs (income) was! Yet, it was the Property Tax and the Sales Tax
requirement that put those retailers at a disadvantage with the Ohio
consumer.

How can the State of Ohio, as well as County Governments, expect a
retailer, small or large, commit to opening up a retail store, and be
required to pay taxes on their inventories, generate sales-tax revenues.

When it's those two taxes that weaken the retailers' ability to compete
for the Ohio consumers support. If those two taxes did not exist, then,
and only then, could the retailer compete fairly with the consumer, and
be in a position of offer jobs (more income for individuals, and more
income taxes for the government).

Retail businesses should provide tax revenues to the State of Ohio, as
well as, the County Governments and the Cities in which they operate.

But that revenue must be from a profit and loss basis, and not from just
being there.

A retail business, which is prospering, is providing jobs (employee
incomes), and needed incomes for landlords (additional income and
Real property taxes to local governments). Without those retail
businesses, local areas do not prosper.

Most retail stores have low paying jobs. Why? The retail business
must be competitive in order get the needed support from the
consumer. A pay hike would allow that retail store to provide its
employee a means to a higher standard of living. However, that
retail store has to be competitive. A pay hike would increase its
cost substantially, requiring it to raise its prices, thereby, losing
much of its support from the consumer. If that retail store did not
have to pay property taxes on its inventory, and was no longer
required to charge State Sales Tax, it would be able to be more
competitive with the Ohio consumer, and generate more profits
so that it could increase its employees incomes.

This increased income would generate higher income taxes for the
State of Ohio, as well as, the Cities in which the businesses were
located. It would also increase the traffic flow to all the businesses
in the area, and create additional employment opportunities.

Businesses are dying in Ohio and the Ohio Legislative Body is to
blame. You have the power to make Ohio retail business competitive,
but chose not to. You are listening to the Ohio Tax Department with
their plans to make the Ohio consumer pay the Use Tax, or that the
Federal Government will find a fix for the problem that the State of
Ohio created in unfair tax laws that hurt its own Ohio businesses.

This problem has existed for many years, ever since AT&T invented
the 800 WATS service that allowed Ohio consumers to call "toll-free"
to retailers in other states. Ten of Thousands of Ohio businesses,
owned by Ohio residents, have gone out of business with their owners
losing everything, including their homes, marriage's, and their health,
all because of the stubbornness of the Ohio Legislative Body refusing
to protect Ohio business, but instead, sucked them dry with unfair
taxation.

The State of Ohio Legislative Body should be deeply ashamed of
themselves to cause many Ohio Residents, who own Ohio retail
businesses, to live in sub-poverty. The Ohio Legislative Body cannot
ignore this any longer, since this past behavior, made by the Ohio
Legislative Body, has now come back to bite them where it hurts, in
lost tax revenues, lost employment in Ohio, and many empty retail
store spaces throughout Ohio. Ohio State Government has really
worked hard to deserve being at the bottom of the list of States being
friendly to small business.

Any Legislator, who owns stock in any dot-com or mail-order firm,
should not be allowed to vote, nor even voice an opinion, regarding
Ohio's Sales or Use Taxes as they would have a "conflict of interest".
It would be to their advantage for Ohio's Sales-Tax to be higher, so
that their ownership of stock, would have a greater chance to increase
in value. Any Legislator, who has utilized any mail-order or internet
facility, to make a purchase out of the State of Ohio, and was found
to have not voluntarily reported and paid the Ohio Use-Tax, should
be immediately barred from the Ohio Legislative Body, and forced to
resign from their office.

There has been no reasonable excuse for the State of Ohio to not
correct the unfair taxation for Ohio businesses, except for laziness.

The Tax Commissioner for the State of Ohio doesn't even follow Ohio
Law. The Tax Commissioner doesn't even respond to letters from Ohio businesses.

Most Ohio Legislators will not respond to this letter, even though they
know the contents above are actually reality. Ohio Government should
be the leader in making its businesses healthier. Stop reporting about
all the new business that is starting up in Ohio! What happened to the
old businesses that were already destroyed by Ohio Tax laws?

It seems that Ohio Government has an attitude that businesses have
an endless flow of money, especially retail. Yet, it is the retail business
is forced to pay low wages. Could you live and support your family on
what the average employee earns working in a retail store?

You know that the consumer receives the end benefit of lowest cost,
yet, the Ohio Government keeps Ohio retailers non-competitive with
local consumers. These are Ohio residents, who own Ohio retail
businesses, who work long hard hours, that have two unfair strikes
against them, both dealt by the State of Ohio. The property tax and
the sales tax both keep small Ohio retailers at a weakened, non-
competitive basis with the Ohio consumer.

Currently, the State of Ohio Legislators cannot even agree on the
"tax-holiday" for Ohio consumers. Its already been moved from the
traditional holidays, to a point late in January. That will hurt the small
retailer the most. This move was made to try and protect primarily
the State of Ohio's revenues. It was a move that will further weaken
the small retailer.

It clearly shows that the Ohio Legislators do not have a concern, or
is it a lack of a realistic understanding, of what a small business
must do to compete. The small Ohio retailers need help now. This
should have occurred many years ago. Ohio consumers will not be
impacted regarding what days are picked, if any, for a "holiday-tax"
in Ohio in as much as they already have a 365 day per year holiday
on Ohio Sales-Tax by spending their money out of the State of Ohio.

Some of my friends are considering buying a new computer. They are
waiting to see if this "tax-holiday" ever passes in Ohio. If it passes,
they will purchase their new system locally. If it doesn't, they will order
it from Dell Computers, not Gateway.
Reason: Dell doesn't charge Ohio Sales or Use-Tax and Gateway
                 does. Gateway Computers would sell many more computers
                 in Ohio, if they closed all Gateway stores in Ohio, and that's
                 a fact.

That is why you can take you proposed
two-day tax holiday
and shove it.

It won't correct the problem that destroys Ohio small retail business
365 days a year. Besides that, how many of you politicians are going
to try a take some unjust credit for trying to save small retail business
in Ohio, while at the same time, try and take some unjust credit, for
saving thousands of dollars for Ohio consumers? A two-day spark in
small business sales is not going to save Ohio small retailers.

Permanent changes are needed now and those changes should have
occurred many years ago.

The State of Ohio must change their attitude. Tax revenues from
businesses must be derived on a basis of income earnings for that
business, and not put a drain on its liquid assets with property tax.
While at the same time, keeping them non-competitive, with local
consumers, by requiring them to be the unpaid Sales-Tax collector.

Its the current formula, the State of Ohio has in place, that put two-
strikes against every Ohio small retailer. It goes well beyond unfair.
It is cruel, it is irresponsible, and it should have been changed years
ago.

The long-term plan, to phase out property tax, must be expedited for
its total elimination now.

Ohio State Government doesn't understand what is happening in the
real world, and they aren't getting the message. The Ohio retailers
have been in trouble, losing the Ohio consumers for many years, this
is not a new thing. With the insistence that Ohio Property Tax and
Sales-Tax must remain, many more Ohio retailers will collapse and/or
be kept at sub-poverty levels.

The Ohio Tax-Laws restricts, Ohio residents, who desire to have an
Ohio business, to serve Ohio consumers.

Many more Ohio retail stores will go "out-of-business" shortly after
the first of the year. This happens every year. All you have to do is
look at all of the empty stores in shopping centers and malls. What
the "out-of-business" really is caused by, was that the State of Ohio
sucked out that businesses needed profits (with property-tax), and
kept it non-competitive with the local consumer with Sales-Tax,
thereby providing the "insufficient cash-flow" to remain solvent.

I hope that all of you have a Happy Thanksgiving, and a Merry
Christmas while you have your holiday breaks. Most of the small
Ohio retailers will be wondering if the New Year will bring any hope.

How many additional small Ohio retailers will disappear next year,
because, again, Ohio Legislators couldn't act to protect, or, be fair
with Ohio small retail business.

Sincerely,

Rick Wells, NOARD
Brunswick, OH 44212

PHONE: 330 225-7373

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