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Letter to Ohio Governor, Ohio Legislators and 
the Committee to Study State and Local Taxes 

IS THE COMMITTEE TO STUDY STATE AND LOCAL TAXES GOING TO BE EFFECTIVE, OR IS THE CURRENT OHIO LEGISLATORS
GOING TO IGNORE THE RECOMMENDATIONS, AS THE PAST LEGISLATORS DID?   

October 1, 2002

TO: Ohio Governor Bob Taft, Ohio Legislators and the 2003 State/Local Tax Study Committee.

I highly recommend that you access the 1967, 1982 and 1995 previous committee reports available at the Committee's 
website http://www.state.oh.us/tax/taxstudy/taxstudy.htm I also recommend that you look over the state-studies at
the following website for the Institute for State Studies http://www.statestudies.org/institute.html  Please download
and printout all of those reports and read them.

In 1982 (twenty years ago), the State of Ohio wrongfully made the decision NOT TO KEEP TAXATION AS LOW AND/OR FAIR AS
POSSIBLE FOR ALL OHIO BUSINESSES. THEY CHOSE TO GIVE SPECIAL "TAX-BREAKS" TO A FEW COMPANIES to encourage
them to move/expand to/in Ohio, WHILE NOT ADDRESSING THE NEEDS OF OHIO RETAIL STORES TO REMAIN COMPETITIVE
WITH THE OHIO CONSUMERS.

The Ohio Legislators have ignored the overwhelming evidence that: 1) That major changes have taken place in the options
that Ohio consumers have to purchase goods, and 2) That they have overly stressed many Ohio Retailers to the point that
thousands of Ohio Retail Stores have closed because of being kept uncompetitive with Ohio Consumers while still being
required to pay taxes (even though they are unable to even make a profit).

Ohio Retail Stores are required to have a Sales/Use Tax Vendors License and would most likely be on a monthly payment
schedule. The total number of these type of accounts have been declining rapidly the past four years. As of July 1st of the
year shown, Ohio had the following totals for vendors under that category: 1999 - 113,754, 2000 - 94,515, 2001 - 92,590 and
2002 - 88,790. The State of Oho LOST 24,964 VENDORS who fell under that category, and most of them were most likely Ohio
Retail Stores. That is a 21.9 PERCENT LOSS IN 4 YEARS! 21,164 (OR 84.7 PERCENT) of that decrease was before the events of
September 11, 2001.

Two-Thirds of this Nations economy is driven by Consumer-Spending and the Ohio Legislation has sadly under estimated
the "Power of the Consumer". It is "Human-Nature" for an individual to SAVE MONEY by paying less for desired merchandise,
and the existing Ohio Taxation Laws are driving Ohio Consumers away from the Ohio Retail Stores, UNFAIRLY.

Ohio Retail Stores are the "SALES-TAX-COLLECTORS" for the State of Ohio. Ohio Retail Stores are also not exempt from the
requirement to the PAY PERSONAL PROPERTY TAXES on their INVENTORIES. NO CONSIDERATION IS GIVEN TO ANY OHIO
RETAILER AS TO WHAT ECONOMIC IMPACT those tax requirements may have in being able to retain and/or compete for
 the Ohio Consumers business.

While our existing Governor and candidate Hagan both want "tax-loopholes" to be plugged, the Department of Development
and the Legislators involved with those "tax-incentives", are handing them out right and left. They even just granted Target
Corporation a 75 percent 10 YEAR "tax-credit" for a new distribution center (a Multi-Billion Dollar Retailer) who is NOT
CONFORMING to Ohio's Use-Tax Laws involving "SUBSTANTIAL-NEXUS" when shipping thousands of packages into Ohio
everyday from their "out-of-state" retail outlet TARGET.COM website/facility in Minnesota (losing Ohio Government Millions of
Dollars of Sales-Tax Revenues). Every TV commercial that Target airs has target.com right at the beginning of it. LLBean is
now running TV commercials pushing their "toll-free" number to call for a free catalog and displaying their internet web
address. There are tens-of-thousands of Mail-Order and Internet websites THAT DO NOT CHARGE OR COLLECT ANY OHIO
SALES/USE-TAX. OHIO CONSUMERS LOVE IT!

The Ohio VOTER has already made their decision if they want Sales-Tax or not. They are already voting with their wallet.
Hundreds-of-Thousands of Ohio Consumers are NOW avoiding any Ohio Sales-Tax by purchasing their goods "out-of-state"
via Mail-Order, Catalog or the Internet. Any proposal to increase Ohio's Sales-Tax will simply push even more Ohio
Consumers into buying more goods "out-of-state". Ohio's Sales-Tax Laws (in essence) helped to create Mail-Order and
increased the savings potential that Ohio Consumers receive by avoiding the Ohio Retail Stores, while at the same time,
weakening the Ohio Retailers financial ability to remain competitive (even to stay in business). THE OHIO VOTER/CONSUMER
WILL ALWAYS FAVOR A SALES-TAX INCREASE VS. A INCOME-TAX INCREASE BECAUSE THEY ALREADY KNOW HOW TO SAVE
100% OF THE SALES-TAX FOR MANY OF THEIR PURCHASES.

The 1967, 1982 and 1995 Committee Reports ALL MAKE THE STATEMENT THAT OHIO TAXATION LAWS ARE UNFAVORABLE TO
ECONOMIC GROWTH WITHIN OHIO. The 1982 Report recommended that the Property-Tax for businesses "be repealed". The
1995 Report, with respect to Property-Taxes involving business taxation, recommended that the "Property-Taxes on
INVENTORIES" be ELIMINATED IMMEDIATELY. >From page 7-4 of the 1995 Report. "Personal property taxes are levied on
inventories in Ohio. Most states which impose the personal property tax do not tax inventories, in fact, only 16 states
continue to tax inventories (these include Indiana, Kentucky and West Virginia). There are many reasons why inventories
should not be taxed. The tax is inequitable, because the presence of a high level of inventories does not necessarily imply a
greater ability to pay. In fact, the presence of a large inventory value may be less an indicator of wealth than an indicator that a
firm has had a bad year and consequently has less ability to pay. Moreover, some industries naturally require higher levels of
inventory than others and are unfairly treated under tax.   Clearly, the existence of an inventory tax is a negative factor for any
business considering an Ohio location for a distribution center. It acts as an offset to the locational advantages of the state.
Thus, the unfairness of the tax and its negative impact for development in Ohio are two strong arguments against the
personal property tax on business assets." This was ignored by the Ohio Legislators in 1982, and then again in 1995 when the
Internet was born. Regarding the State of Indiana mentioned above, they have already enacted LEGISLATION TO PHASE-OUT
"property-taxes" on inventories over a 5 year period starting next year.

Ohio Government must make the commitment NOW to overhaul the Ohio Tax-System. It is far too complicated, and is ignoring
the needs of small retail business. In fact, it destroys small retail business in favor of giving "tax-breaks" to large companies.
TAX BREAKS SHOULD NOT BE ALLOWED - - AS RECOMMENDED IN THE 1995 STUDY. Those "tax-credits" are unfair to all the other
Ohio businesses. The crippling taxation revenues collected and paid by Ohio Retailers are often just offsetted by the "tax
credits" that manufacturing firms receive. There seems to be a "Power-Hungry" set of Ohio Legislators who want to play
"GOD" on who gets the breaks and who doesn't. THE ABILITY OF "TAX-BREAKS" DISTORTS FAIR TAXATION by changing the
rules for some, but not for most.

Also, in the 1995 Report: "TAX INCENTIVES AND ENTERPRISE ZONES: Special tax treatment of businesses by definition creates a
horizontal inequity. The choice facing any state is whether to give targeted tax incentives or to provide all of the states's
businesses with the lowest taxes possible. Ohio has chosen the former approach, and provides a range of tax incentives.
The most important is the Enterprise Zone Program." From page 7-8 of the same 1995 Report: "Proposal: Abolish enterprise
zones, and prohibit the use of targeted tax incentives to recruit companies to Ohio." THIS IS THE "TAX LOOP-HOLE" THAT
EVERYBODY IS TALKING ABOUT... OHIO DID NOT DESIRE TO MAKE ALL OF OHIO BUSINESSES HAVE THE LOWEST TAXES POSSIBLE
(so where is fair taxation???).

The Ohio Retail Store cannot exist without customers. IT IS TOTALLY RIDICULOUS FOR THE STATE OF OHIO TO PUT THE SAME
BUSINESS TAX BURDENS ONTO OHIO RETAIL STORES, WHEN "PRICE" IS THE MAJOR FACTOR THAT MOTIVATES THE CONSUMER TO
MAKE A PURCHASE.

Ohio Government should allow Ohio Retailers to be able to compete "on a equal and fair basis" for business from the Ohio
Consumer. Only by immediately eliminating personal-property tax on INVENTORIES, and immediately eliminating SALES-TAX
ON CONSUMER GOODS will you get the Ohio Consumer back into the Ohio Retailer.

Ohio Legislators must allow Ohio County Governments to develop an INCOME-TAX and eliminate "Piggy-Back" Sales-Taxes as
a method of revenue generation. The same is true for the Regional-Transit Authorities and School Systems.  The higher the
total Sales-Tax is, the more the local consumers will stop coming to the local stores. The inability of the Ohio Tax Department
to be able to police and enforce all "Use-Tax" collection from Ohio Consumers is also undermining those needed revenues
for Ohio's County Governments. The Multistate Tax Commission effort will be very time consuming and expensive for the
State of Ohio to implement and is many years away. Todays consumer has no loyalty from whom they purchase from. Their
purchases are based strickly on "LOWEST-PRICE, FREE-SHIPPING and NO-TAX". The MTC effort will simply shift the consumers
decisions to other retailers in other states which do not participate with the program, and, the State of Ohio has no-way to
monitor that.

On page 5-16 of the 1995 Committee Report under Sales-Tax. "The distribution of Ohio's sales tax burden is regressive when
measured against current income. Households with incomes between $5,000 and $9,999 pay 2.6 percent of their income in
sales taxes and households with incomes above $50,000 pay 1.3 percent of their income in sales taxes. Thus, the burden on
low-income households is almost twice as large as that on high-income households. Still, more than 60 percent of the sales
tax on consumer purchases is paid by households with $30,000 or more in income. Moreover, the per household tax payment
is much greater for higher-income households. For example, households with incomes over $50,000 pay nearly five times
more in taxes than households with income between $5,000 and $9.999." HAS ANYONE FACTORED IN THAT TODAY MOST
HOUSEHOLDS OVER $20,000 ARE NOW CONNECTED TO THE INTERNET AND HAVE THE ABILITY TO AVOID THE OHIO SALES-TAX ON
MOST CONSUMER GOODS??? Nobody in the Ohio Government can report the actual loss of Sales-Taxes due to "out-of-state"
purchases because the information is not obtainable. The largest drop of Sales-Tax revenues will be from the higher income
households who have the benefits of additional technology resources available to shop "out-of-state", right in their home.
The percentage that higher-income households create in sales-tax revenues are "assumed" to be spent locally and NO
INFORMATION IS AVAILABLE AS TO HOW MUCH PURCHASING IS DONE "OUT-OF-STATE" in which they were not charged any Ohio
Sales or Use Tax.

I estimated back in 2001 the State of Ohio lost $450,000,000.00 in Sales-Tax Revenues from Ohio consumers who were making
their purchases "out-of-state". That would relate to $375,000,000.00 in State Sales-Tax and a additional $75,000,000.00 in County
Government/Regional Transit Piggy-Back Sales-Taxes. However, that relates to $7,500,000,000.00 (7.5 BILLION DOLLARS) in lost
retail sales within Ohio for Ohio Retail Stores from Ohio Consumers. That would be for fiscal-year July 1, 2000 thru June 30,
2001 (before the tragic events of 9/11). I strongly feel that the "out-of-state" losses for the year that followed (2002) will reach
a total of $600,000,000.00 in lost Sales-Tax for Ohio Tax Revenues. That would relate to losses of $500,000,000.00 for the State
and $100,000,000.00 for County Government/Regional Transit Services. Ohio Retail Stores would have lost $10,000,000,000.00
(10 BILLION DOLLARS) of Retail Sales. For every dollar lost in your Sales-Tax Revenue a local Ohio Retailer lost 16 dollars of
needed local support.  This whole thing is way "OUT-OF-CONTROL".

From the 1967 Committee Report..
"EVALUATION OF TAX POLICY
Most persons of knowledge and experience in the field of taxation would agree that the following factors should be included
in an evaluation of tax policy.
EFFECT OF ECONOMIC GROWTH
A tax structure should be designed so as to be consistent with the economic goals and objective of a state. One of Ohio's
principal goals is the development and expansion of desirable economic activity within the State. This suggests
that the State should not depend excessively upon taxes with major deterrent or distorting effects on economic
activity or upon taxation of consumption of legitimate goods and services in such a degree as to arbitrarily depress
such consumption.
NEUTRALITY
As a general proposition, a tax should be applied uniformly over a broad base rather than being spotty or highly selective as
to the portions of the tax base on which it falls. Its purpose normally is the raising of public funds in an equitable manner and
it should be manipulated for non-fiscal purposes, if at all, with great care and with clear demonstration that the regulatory
purpose is essential.
EQUITY, OR FAIRNESS
The burden of a tax and of the tax structure should be distributed as fairly as possible among the taxpayers. Those who are
similarly situated should bear comparable burdens. Inevitably the kinds and amounts of taxation fall differently on taxpayers
who are not similarly situated but these differences should be as simple and reasonable as possible. If governing bodies
have to enact tax policy under crisis circumstances, equity often is reduced by following the path of least resistance in order
to obtain new revenues.
ADMINISTRATIVE FEASIBILITY
Taxes should be capable of effective administration at reasonable cost to the government. Taxes easily evaded or avoided
are undesirable. Taxes which are unduly selective or punitive or inequitable tend to be complicated in their administration,
encourage avoidance and evasion, and incur higher administrative costs per dollar of revenue collected.
COMPLIANCE COSTS
Taxes should impose minimum cost and inconvenience on the taxpayer in the course of his compliance with the law.
Especially, the tax should not penalize the conscientious taxpayer who keeps good records as compared with others who are
less careful.
RELATIONSHIP TO THE MODERN ECONOMY
Insofar as possible, a tax or tax structure should be capable of growing with the economy of the state and should be revised
from time to time so as to correspond with the true makeup of that economy as it develops and changes.   Some products,
habits of consumption, and classes of enterprise decline, while others rise to take their place. Ideally a tax structure should
be reviewed and revised as necessary so as to bear a relationship to the way people are doing things, regardless of whether
additional revenues are needed at a given time."

The above text is straight from the 1967 report. The State of Ohio did not make any changes to protect the losses of the Ohio
Consumers business to Ohio Retailers as "toll-free" telephone numbers were developed allowing consumers to call
"out-of-state" mail-order/catalog companies without incurring any "out-of-pocket" cost for comparison shopping. Ohio
Government failed to change tax-revenue-laws to correct the way Ohio consumers were changing in the way they did things
as technology gave the Ohio Consumers a "no-cost" access to national competition for the consumers retail dollar. The
Sales-Tax has been a major deterrent for purchasing consumer goods for Ohio consumers from Ohio Retailers (this has
been against the principles of EFFECT OF ECONOMIC GROWTH, above). It is also extremely easy for the Ohio consumer to avoid
the Sales/Use-Tax on most consumer items when buying "out-of-state", therefore, this makes the Ohio Sales Tax an
UNDESIRABLE TAX (see ADMINISTRATIVE FEASIBILITY above). And finally, the State of Ohio did not change the way it could
effectively monitor "out-of-state" sales as consumers changed their buying methods, and did not grant any "tax-relief" to Ohio
Retail Stores to allow them to remain competitive, therefore ignored the "relationship to the modern economy" factors above.

Up-Front Sales-Tax on leases for vehicles and business equipment, as well as the cigarette-tax increase were recent changes
to fix the "Ohio Budget Crisis". They are perfect examples of Ohio Legislators making changes in tax revenue laws/rates in a
"crisis circumstance" as they seemed to be the path of least resistance in order to obtain new revenues.  THOSE
LEGISLATORS WHO SAY THAT SALES-TAX DOESN'T HURT A BUSINESS BECAUSE ITS THE CONSUMER THAT PAYS THE TAX AND NOT
THE BUSINESS, DO NOT UNDERSTAND THAT THE OHIO CONSUMER HAS ALREADY STOPPED COMING TO THE OHIO RETAIL STORE AND
IS NOW SHOPPING WITH "OUT-OF-STATE" MAIL-ORDER AND THE INTERNET FIRMS.  The recent annoucements by the State of Ohio
Tax Department that they are pleased with the increase in the Cigarette-Tax Revenues for the State since the Tax Increase
just confirmed to all of the Ohio Consumers who are now shopping "out-of-state" for their cigarettes that Ohio Government
didn't need their money anyway. The Tax Laws have made it A GAME WITH MANY CONSUMERS AS TO HOW MUCH MONEY THEY
CAN SAVE.

Legislators should not enact changes in tax-laws and/or rates without first understanding what reaction either consumers
and/or businesses might have, and, to what point that these changes would adversely effect unfairly Ohio Businesses. The
Ohio Department of Taxation, Enforcement Division, should be present in any legislative committee meeting involving any
potential tax changes, to give reasonable input as to the potential difficulties in verifing that tax obligations are being met by
both business and/or the consumer.

How can you expect a Ohio Retail Store to be able to pay a "Living Wage" to their employees? How can you expect owners of
small (tiny) retail stores to have any "Quality of Life" if you keep them unfairly uncompetitive with the Ohio Consumers,
especially for items readily available on the Internet/Mail-Order?

In reality, the Ohio Tax-Laws for Ohio Retail Stores really SUCK. You must, in all fairness, shift more of the tax revenue needs
toward individual income-tax increases, and less dependency from tax-revenues from retail stores in the form of sales-tax
collections and inventory taxation. This will be a disliked change to the Ohio Voter (who is the Ohio Consumer who saves by
shopping "out-of-state") but will also be appreciated by those Ohio consumers who do desire to support local businesses,
but when they do, have higher "out-of-pocket" cost caused by the present taxation system. Only by doing this will you put the
local Ohio Retail Stores on a "Fair and Equal Opportunity Basis" with establishng a "true level playing field". Increase the "NET
INCOME-TAX" for businesses for those that are able to make a profit, but don't destroy them by requiring them to pay taxation
even though they are suffering losses.

Again, any Ohio Sales-Tax increase will simply DRIVE MORE OHIO CONSUMERS TO SHOP "OUT-OF-STATE". At a minimum, lessen
the savings that Ohio consumers receive when they shop "out-of-state" by REDUCING THE SALES-TAX BY ONE PERCENT (reduce
the State Sales-Tax from 5 down to 4 percent). That would start getting the Ohio Consumers back into the Ohio Retail Stores
faster than anything else.

There are those that feel that the only reason that sales are down from local consumers at local stores is mainly due to the
higher unemployment and the stressed economic times. Of course there would be some local business affected that way.
However, those that are employed continue to seek "Lower-Prices" for their own desired purchases and are expanding their
selections to more "out-of-state" retailers (PERMANENTLY). This has now become habit and continues to erode your current
Sales-Tax Revenue base, and further reduce the local Ohio consumer support of Ohio Retail Stores.

The current and past Ohio Legislators have put the needs of Tax-Revenues shamefully ahead of the well-being of Ohio Retail
Stores to be able to compete with the Ohio Consumers on a "fair and equal basis".

Again, I respectfully request that Amateur Radio Equipment and accessories be exempt from Ohio Sales-Tax effective
immediately when sold to an FCC Licensed Radio Amateur Operator. I estimate that 85 percent of all major amateur radio
equipment and accessory purchases are now purchased "out-of-state" by amateur radio operators.  There are only 4 amateur
radio stores in Ohio. It is not the other 3 in Ohio that I am having trouble competiting with. It's the other 96 in the other 47
States (USA 48) in which none of them charge or collect any Ohio Sales/Use-Taxes, and many provide "free-shipping". I would
estimate that 70 percent of all Amateur Radio Operators are on the Internet and 100 percent of them have phone service that
can dial 800 WATS numbers anywhere in the U.S.A..

Please don't make the same mistake that the Ohio Legislators made in 1982 and 1995 by ignoring the recommendations of the
newly established Committee to Study State and Local Taxes (Ohio).

Regards,

Rick Wells

NOARD
Brunswick, Ohio 44212
email: k8sci@noard.com
PH: 330 225-7373

OHIO GOVERNOR & LEGISLATORS are LYING to try and keep their JOB - READ 

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