The Greater Cleveland Partnership’s (GCP) strategic plan, ForwardCLE, calls for a better understanding of our collective tax climate and today data from a GCP tax analysis was released. GCP members commissioned EY to analyze our region’s tax environment and its impact on growth and competitiveness as compared to ten similar markets in the Great Lakes region: Buffalo, Cincinnati, Columbus, Detroit, Indianapolis, Kansas City, Milwaukee, Nashville, Pittsburgh, and St. Louis. The information included in the tax study resulted in GCP members calling for increased community collaboration and the exploration of potential systematic solutions.
“The study shows our residents face a disproportionate tax burden,” said Scott Chaikin, Executive Chairman of Dix & Eaton and Chair of GCP’s Board of Directors. “It also points to the need for systemic solutions. We will do additional research to better understand specific opportunities to improve our systems and structures and will convene future conversations with other community stakeholders to explore what changes are possible.”
The study concludes most of Cleveland’s advantage is a result of state-level tax competitiveness. While absolutes cannot be surmised from any one tax study, no matter how comprehensive it is, the initial data also explains Cleveland’s per capita state and local tax collections ($5,426) exceed the average burden ($4,794) levied on comparable cities in our region. At the state level, Ohio’s taxes are relatively competitive with peer states, with per capita taxes of $2,469, or 7% lower than the $2,646 benchmark city average per capita tax burden. In contrast, Cleveland’s local taxes averaging $2,958 per capita are 38% higher than the $2,148 average per capita tax collections in the benchmark cities. The study did not examine the level of revenue sharing between state and local governments.
“Initially, the study was intended to help us better understand our voting decisions and their collective impact, but the stark difference in our tax levels with neighboring peers shows that a ballot-by-ballot approach isn’t sufficient to create a positive competitive trend for the future,” GCP President and CEO Joe Roman stated.
Feedback from GCP members will continue to be the key part of decision-making going forward, as GCP uses the data compiled in the tax study to analyze specific proposals when an institution or campaign is seeking GCP’s endorsement of a specific issue.
“The purpose of this crucial exercise is not to single out any one tax or entity, but to better understand how our community should critique and properly question levy requests in the future,” added Kevin Johnson, Managing Partner at NexGen Interactive and the Chair of the GCP study group. “Thankfully, we live in a generous region and GCP members understand the strong need for many of these worthy initiatives. Frankly, we’ve been supportive of most of them. We also recognize, however, that we need more information, our fellow citizens are depending on our support, and our cumulative ability to raise taxes is not limitless.”
GCP will strongly encourage entities that seek to alter a tax structure to clearly communicate their objectives early in each election cycle and adhere to GCP’s member-driven review process and new protocols on awarding campaign funds. Included among the many factors our business leaders will continue to consider, when analyzing future tax proposals that could harm our progress, are: the purpose of the tax levy; the services or benefits it aims to provide the taxpayers; the precedent in other communities for the type of levy and a comparison of rates; alternatives considered by the proponents; and, accountability measures built into the proposal.