Ohio Ranks In Top-10 for Small Business Climate

Small business vitality is a major driver of the Ohio economy, as well as that of all 50 states.  Given that entrepreneurship is such an important component of the economy, it seems reasonable that public policy decisions are made which encourage entrepreneurial investment.  Entrepreneurs tend to gravitate towards states that have a favorable legal and regulatory environment.  Policymakers should not deter private enterprise by putting the growth of government on the backs of the employers.

Annually, the Small Business & Entrepreneurship Council publishes a Small Business Policy Index.  This index includes 50 metrics within the categories of taxes, rules and regulations, government spending and government effectiveness.  The index is designed to be so comprehensive that it is believed to accurately indicate whether state polices have created an environment in which small businesses can open their doors and experience long-term growth.  In effect, the index will identify the states in which policymakers have contributed to creating a difficult or more costly entrepreneurial climate.

The 2016 Small Business Policy Index ranks Ohio ninth out of all 50 states, with Nevada in the top spot and California dead last.  In most of the metrics, particularly those pertaining to individual taxes, government revenue and expenditures, Ohio ranks near the middle of the pack.  However, the metrics which strengthen Ohio’s ranking, and are largely responsible for the state’s inclusion in the Top-10, are related to corporate taxes.  More specifically, Ohio has no state corporate income tax and no state corporate capital gains tax.  Another metric which positively affected Ohio’s ranking is the fact that there is no longer a death, or estate, tax.  That being said, it is important to note that Ohio does have a tax on Ohio-based gross receipts that both corporations and pass-through businesses pay.  This tax, called the Commercial Activity Tax (CAT), was not included in the index.

The Top-10 ranking given by the Small Business & Entrepreneurship Council confirms that Ohio has made progress in many categories.  The Ohio Chamber of Commerce and the Ohio Small Business Council (OSBC) recognize that Ohio’s small business environment is strong.  However, we will continue to advocate for pro-business legislation and fight policies that would make it more challenging for Ohio businesses to operate and compete.