Columbus—The day before LeBron James called Cleveland quits for Florida, a move that will deprive the city and state of major tax revenue, Gov. Ted Strickland and AT&T announced the investment of $120 million in Akron, Ohio for AT&T’s ninth mobility data center.
“Ohio’s strong business climate and tax structure makes it easier for companies like AT&T to grow its business here today, and our regulatory reform through Ohio’s telecom bill will help us attract investments of the future,” Strickland said in a press release on Wednesday. “I want to thank AT&T for its partnership and commitment to laying a solid foundation for prosperity in Akron.”
The new center, housed in the former Ohio Bell Data Center, will strengthen AT&T’s 3G service and lay the groundwork for a 4G/LTE expansion. The data center will help facilitate the delivery for a variety of smart phone data messaging functions. It will also create a wireless corridor with AT&T’s mobility customer care center in Youngstown, Ohio.
Many believe that Ohio’s tax structure played a large role in James’ decision to leave the state. James’ will no longer be subject to Ohio’s top income tax rate of 5.925% and Cleveland’s income tax rate of 2%, for about an 8% total. Florida, on the other hand, has no income tax so even though James may be paid less up front, he will come out ahead in the long-run.
As James and businesses leave the state, many also question whether Ohio’s business climate is as ‘strong’ as politicians say.
The Tax Foundation’s 2010 Business Tax Climate Index, for example, ranks Ohio as 47th out of 50. Their index compares the states in the five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.
In 2009, Chief Executive magazine conducted a survey of 543 chief executives officers to determine the best and worst states for jobs and business growth. Criteria included proximity to resources, regulation, tax policies, education, quality of living and infrastructure. Ohio came in at 45, and was also dubbed one of the “biggest losers” for dropping 11 places, more than any other state, since 2008.
JP Donlon, Editor-in-Chief of the magazine says, “Our survey, year-over-year proves that those states with the worst records continue to practice the same policies that alienate businesses. As the nation’s economic problems continue to snowball and an increasing number of states experience budgetary problems, state governments ought to take a hard look at their taxation and unionization policies if they want to turn the page and attract new businesses and capital to their provinces.”
An article in the Atlanta Journal-Constitution published earlier this year, “Ohio’s Pain is Atlanta’s Gain,” listed a number of businesses that have recently left Ohio for a better business climate. This includes ATM manufacturer NCR moving their headquarters from Dayton to Duluth, GA last June; Fischbein choosing Suwanee, GA over Cleveland for its new production line last July; and Novelis, an aluminum can manufacturer, also bypassing Cleveland for Buckhead, GA as the site for their new headquarters last February.
AT&T’s decision to locate their latest mobility data center in Dayton is largely due to new legislation that deregulated aspects of the landline telephone business in Ohio, says Sarah Briggs, director of public affairs in Ohio for AT&T. Strickland signed the Ohio Telecom Modernization Act into law in June.