Ohio Lt. Gov. Bruce Johnson, who also serves as the state's chief of economic development, says the reform package was the result of listening to the concerns of Ohio's manufacturers.
      "We had been tinkering around the edges of tax reform for more than a decade," Johnson says. "We watched as our manufacturing base was fading. We are taking this aggressive step because the economy has changed dramatically. This will make us one of the real leaders in the nation."
      With leaders of both legislative chambers backing the governor's plan, Johnson expects the package to be passed and signed into law, scheduled to take effect July 1, 2005.
      In fact, Johnson said that he and members of his team at the Ohio Department of Development are already using the tax plan to recruit employers.
      The reforms can't take place quickly enough for the state's beleaguered manufacturers.
      "We've been hindered by a decades-old system," said OMA's David Johnson. "The system is a liability."
      J.B. Hoyt, government relations director for Whirlpool Corp., said that phasing out the tangible personal property taxes would bring Ohio into a competitive balance with the American South, Mexico and other countries for factory jobs.
      "Taxes such as this simply don't exist in those markets, which provides them with a competitive advantage," Hoyt said.
      Ohio relies on manufacturers to supply 15 percent of the state's jobs. In January, Ohio lost 3,000 manufacturing jobs.
      Many have blamed the state's tax structure. Ohio currently has the highest taxes on business inventories and equipment in the nation. These taxes fall especially hard on smaller companies that are forced to hold onto inventory longer for the larger companies that demand just-in-time delivery. Taft says it's time to change this system.
      "Ohio's corporate tax is a nightmare," Taft said in his State of the State Address. "And we've got to fix it. Right now we have the worst of all worlds. Our rates are very high, causing 'sticker shock' for companies looking to locate in Ohio."
      The governor added, "We also have an oppressive tax on investment. When a company wants to invest in new machinery and equipment, what do we offer? A high tax burden. Yet another reason to pick Pennsylvania or Kentucky or even Michigan."
      Taft said that "the comprehensive tax reform plan I propose today will unleash Ohio's economic potential."
      Bruce Johnson, the governor's right-hand man, says that "respected economists" predict that Ohio's tax overhaul will result in "hundreds of millions of dollars in new spending and 50,000 new jobs."
      To replace the lost revenue, Johnson says, "We are advocating a gross receipts tax — a tax on the privilege of doing business in Ohio. We will seek to collect a significant portion on gross receipts of companies shipping goods to Ohio. This makes Ohio the ideal platform for making things and sending them to other places.
      "When we are finished here," the lieutenant governor adds, "Ohio will have one of the most aggressively pro-manufacturing business climates in the nation."
      Timken's Lapp says he would advise "anybody who has looked at Ohio in the past and felt there was too much risk from a tort or tax position to take a second look at Ohio.
      "The state has taken a big step toward correcting those problems," he says. "These changes — tort reform [passed last year], tax reform and working on workers' compensation reform next year — coupled with our strong educational system, will ... bring us back to a position of leadership in manufacturing."