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Sales tax changes in Ohio

2013 February 8

So, “Idea 24” has come back to life. Two years ago the Plain Dealer examined “extend the state sales tax to cover graphic design and website design services” as one of a few dozen suggestions for balancing Ohio’s budget. At the time, they dismissed broadening sales tax liability as “an option [that Ohio Governor John] Kasich probably would never consider” despite its being “almost universally supported” by participants in their online budget simulation.

Either they overestimated Kasich’s opposition, however, or else he looked at the same “almost universal” support for the idea and decided to respond to the will of the people… because this week, Ohio “released a list of services… that would be subject to the sales tax under Gov. John Kasich’s budget proposal, which would lower the 5.5 percent state sales tax to 5 percent, but extend the tax to a broad array of services” including, under “Business Services,” “Commercial art and graphic design.”

So, courtesy note to clients, be ready to start paying a 5% sales tax on commissions from Modern Alchemy. I cannot at this moment say with certainty when you may have to do this, or whether a given individual client will have to; every story on this proposal, to date, takes pains to warn that the current proposal’s details may bear little resemblance to what eventually emerges from the time-honored sausage grinder of legislative negotiation, so it may be that no one will have to pay sales tax on my services at all. At this point, who knows, but the proposal has been formally introduced by a governor once considered the primary obstacle to such an idea, so fair warning.

Meanwhile, if anyone wants my opinion, pretty much everything I wrote two years ago still holds. Including Modern Alchemy’s official, formal position that “if Ohio wants to protect the pro-growth, job-creation policies of targeted tax incentives for high-skill visual arts industries, then a sales tax power-grab would be a disaster for working families.” If you want a sound bite, use that one; I’m willing to play the game as custom dictates.

In a hypothetical, more nuanced discussion, I would acknowledge the point made by Ohio’s tax commissioner, that “what was once a goods-based economy is now a service-based economy.” And, furthermore, would assert a readiness to pay for things through taxation; my biggest complaint here isn’t about paying more in taxes but about a corvée in the form of tax-collection services. I would really prefer to be assessed in cash, and then let the state government purchase tax-collection service from professionals who choose to perform that work at an agreed rate (while allowing me to stick to graphic design, and nonfiction writing).

Though, again, that’s in a hypothetical nuanced discussion. In the absence of such, The Official Statement stands. “Sales tax power-grab = disaster for working families.”

Thank you.

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