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Ohio Municipal Income Tax

Guest Quimbob
Guest Quimbob
in Ohio Politics

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Because the Republicans have held power in both houses for a long time. They are making a consolidated effort at consolidating everything in Columbus. Ending the local liquor tax (as JobsOhio apparently does) and income tax would go a long way to put Columbus in charge of everything.

 

I think the answer is fewer, more consolidated municipalities delivering more efficient scalable sevices, and perhaps an end to townships, not the end of all local tax powers. All this will do, lacking serious school funding reform, is make property taxes and misc taxes (admissions, bed, other?) even more unbearable as cities look for revenue...

So who thinks the local income tax, particularly the way it is constructed, is a good idea?  Many cities only allow partial credit of income taxes paid, so you could be paying more than others in local taxes depending on where you work/live. 

I think the system is unjust.  Especially when you end up with communities effectively voting in new or increased taxes that only affect a subset of the community.  Like a bedroom community that has a lower tax rate with a credit that raises their own tax.  When they raise the tax and because they're a bedroom community it's largely just a tax on the police, firefighters, teachers, retail workers, and gov't workers living locally.  There are of course several other similar injustices with this type of tax while also solving funding problems.

I will certainly never defend the local tax system we've got, it's a PITA dealing with RITA, but I'd be concerned about where they intend to replace those funds. If state income taxes were raised and then the funds distributed by the state to the localities I think they could probably do it more efficiently than the cities.

I think the state would too quickly use it to further undermine local control, however, Ohio is hurt by our overwhelming number of taxing jurisdictions. County-wide or state-sponsored regional authorities would be fine by me.

So who thinks the local income tax, particularly the way it is constructed, is a good idea?  Many cities only allow partial credit of income taxes paid, so you could be paying more than others in local taxes depending on where you work/live. 

 

It's completely ridiculous, especially the way certain municipalities *cough*Beachwood*cough* take advantage of and benefit significant the flaws of the system.  People should not be paying full income tax shares to the cities (where they work) in which most spend less than one-third of their weeks.

So who thinks the local income tax, particularly the way it is constructed, is a good idea?  Many cities only allow partial credit of income taxes paid, so you could be paying more than others in local taxes depending on where you work/live. 

 

It's completely ridiculous, especially the way certain municipalities *cough*Beachwood*cough* take advantage of and benefit significant the flaws of the system.  People should not be paying full income tax shares to the cities (where they work) in which most spend less than one-third of their weeks.

But the cities where we work still have to provide roads, police and fire for us. I'm glad that Cleveland gets some tax money from me and would hate to see what the city would look like without the tax money coming from commuters like me.

I will say that local municipalities do an extremely $hitty job at collecting municipal income taxes. It is the height of inefficiency

The article hints that the current collection system by RITA is quite wasteful.  A centralized collection system would save overhead costs.  Those savings could go to our municipalities.  On a site like Urban Ohio, that ought to be popular.

Rationalization without undue centralization.

Most states don't have municipal income taxes.  Governor Rhodes encouraged municipalities to start collecting income tax so that he would not have to take the heat for raising taxes.  Then, at the end of his term, Rhodes raised income taxes by 50%.

 

Today's Chuckle:

"Tea Party" stands for "Taxed Enough Already"

So who thinks the local income tax, particularly the way it is constructed, is a good idea?  Many cities only allow partial credit of income taxes paid, so you could be paying more than others in local taxes depending on where you work/live. 

 

It's completely ridiculous, especially the way certain municipalities *cough*Beachwood*cough* take advantage of and benefit significant the flaws of the system.  People should not be paying full income tax shares to the cities (where they work) in which most spend less than one-third of their weeks.

But the cities where we work still have to provide roads, police and fire for us. I'm glad that Cleveland gets some tax money from me and would hate to see what the city would look like without the tax money coming from commuters like me.

 

I see your point, and it's a good one, which is why I said it shouldn't be a full share of income taxes (oftentimes equivalent or surpassing what one pays in income taxes to their own city of residence) as it is now.  I don't know that roads are always getting 100% of their funding from income tax revenues, anyways.  I think many of those roads that are used heavily by commuters are at least partially paid for through funds from the county and state.

The article hints that the current collection system by RITA is quite wasteful.  A centralized collection system would save overhead costs.  Those savings could go to our municipalities.  On a site like Urban Ohio, that ought to be popular.

 

I don't know about this.  At least RITA is largely a local agency.  There's something about sending even more of our money to Columbus to have them take their cut and send it back to us that isn't very appealing at this moment in time.

 

Most states don't have municipal income taxes.  Governor Rhodes encouraged municipalities to start collecting income tax so that he would not have to take the heat for raising taxes.  Then, at the end of his term, Rhodes raised income taxes by 50%.

 

I've been wondering about this, too.  How do cities in these states fund their local governments?  Better yet, how do all of the townships here in Ohio, I believe none of which have the authority to collect income taxes, get by?

Townships fund road levies on "property/real estate" if they want paved roads.  They usually fund fire levies.  Some townships get by with volunteer fire department and lean budgets.  Police protection may be the county sheriff.  Courts are established at a higher level--like at the county level.  IIRC, Ohio government has a minimum property tax to keep those county functions funded.  Government is three trustees, a clerk and a zoning inspector all paid modest part time salaries.

 

A municipality has a huge number of other obligations like a health department (for sewer issues), city council, a mayor etc.  Most or all of them hire a police chief and several officers and fund an office and cars.

 

Cities in states without income taxes have much higher property taxes.  In Maine, towns have been unincorporating because the public did not want to fund those departments.  The government reverts back to an unresponsive county government.  They cannot afford democracy.  Maine has a weak economy with a weak forest industry and a loss of the shoemakers.

The inheritance tax and local government fund for Colerain township were bigger than the property taxes, and both of those sources of revenue got Kasicked in the Ohio budget.  The inheritance tax is totally gone.  Hence, local governments  lay off employees, services  suffer, and Ohio's unemployment rate stays higher.

  • 2 years later...

Sounds like we're going to be hearing about a special tax district proposal soon!  Which, honestly, I've always been a big fan of anyway.  I think it would make a lot more people in the suburbs happy to see that the people who live downtown are actually paying for a lot of the project themselves.  It may make gaining support for expansions easier.

 

Mann and Murray reflect on their trip to Portland:

http://www.cincinnati.com/story/opinion/contributors/2014/03/26/portland-cincinnati-streetcar-david-mann/6930051/

http://www.cincinnati.com/story/opinion/contributors/2014/03/26/murray-portland-streetcar-depends-citizens/6931271/

 

Murray sounds refreshingly committed to making the project a success.

 

Both are overly focused on the "Special Improvement District" financing structure (where is the call for that regarding the MLK interchange?), but I'd say there is more positive here than negative. Murray doesn't even suggest she's against expansion. Mann hints at support for regional LRT.

 

Downtown already pays for everything.  The neighborhoods contribute almost nothing in the way of earnings tax to the city coffers, which is the bulk of its revenue, and City of Cincinnati property tax is very low.

What's more, UC and the hospitals are all exempt from property tax but their employees already pay huge amounts of earnings tax. 

 

This special taxing district is a pillow for these clowns to fall on.  The fact is that the current phases of the streetcar is consuming 1% of the city's operating budget and 1% of the city's capital budget.  That barely budges upward with construction of an extension to uptown. 

The earnings tax of the people who work downtown might pay for everything.  If a person lives in a city neighborhood and works downtown, where do you give credit to their earnings tax?  Downtown or the neighborhood?

^Downtown.  Say you live in Newport and work downtown.  You still pay the earnings tax and obviously you wouldn't give credit to Newport for generating it.  So if you lived in Oakley or Price Hill and you work downtown, the same logic applies.

I disagree because I am not talking outside the city limits.  A city resident pays the same payroll tax whether he works in the city or not depending upon the need to share with the tax district in which he works. 

 

Certainly, if someone lives outside the city limits but works downtown, then downtown should get credit for the tax generation.  I hate to see the importance of the neighborhoods deminished.  Not everyone can, or should, or wants to live downtown.

 

Just an opinion.

Ohio state law is set up so that the state's municipalities fund themselves primarily through earnings taxes.  This means that downtowns subsidize services in residential areas.  If you don't like it, move to Chicago or LA, which are located in states with no municipal earnings taxes but sky-high sales taxes. 

 

And unless you live in Cincinnati and work in an unincorporated area, you're still paying earnings tax to the smaller city as well as Cincinnati, and many of those smaller cities have similar earnings taxes to Cincinnati.  Norwood's is technically higher (2.0 vs. 1.8, however Cincinnati also has the .3 Metro tax), and all of the NKY cities have higher earnings tax than Cincinnati (typically 2.5%). 

I never said I didn't like it.  Please, where did that come from?

 

I was talking about someone who lives in an area with no income taxes who will still pay Cincinnati income tax if they work there.  Thats why i said if they have to share with their residential area.

 

I never said I disagreed with the taxes, I just said that if you live in a neighborhood within the city limits and work downtown, your income taxes should be credited to your neighborhood.  Its only an opinion.

In Columbus it's sort of like that with some suburbs but not others.

I never said I didn't like it.  Please, where did that come from?

 

I was talking about someone who lives in an area with no income taxes who will still pay Cincinnati income tax if they work there.  Thats why i said if they have to share with their residential area.

 

I never said I disagreed with the taxes, I just said that if you live in a neighborhood within the city limits and work downtown, your income taxes should be credited to your neighborhood.  Its only an opinion.

 

 

Ugh.  In that case, our police force would only respond to calls and fire companies would only be located in Hyde Park and the other wealthy neighborhoods, and the West End, Avondale, and Price Hill would be lawless and uninsurable. 

 

Police and Fire are the two biggest expenses in every city's budget in the United States.  Overwhelmingly the police and fire respond to calls in poor neighborhoods.  The wealthy pay for city services in poor neighborhoods, not vice verse. 

Again, I never said that either.  I live within the city limits, and I want my neighborhood to be credited for my taxes.  I don't expect my neighborhood to benefit more than downtown or the other neighborhoods from my taxes.  Don't know what the ugh means.  Still don't know what you are saying.

 

I would like to see numbers though.  I'd like to see what the taxes generated from each area are.  I have a feeling you have them!  Please share if you do.  Maybe you could compare the entire UC/Hospital area with downtown.

The overall point is that any neighborhood, whether in the city or suburbs, that's made up of mostly single-family detached houses, simply doesn't cover its costs in city services and infrastructure.  So anyone who says neighborhoods like OTR or downtown need to "carry their own weight" don't realize that they're already subsidizing the rest of the city, and the city is subsidizing the suburbs, and the metro is subsidizing rural areas.  The tax-generating abilities of only moderately dense development (think 2-3 story rowhouses) is so much larger than even the best suburban typology, while requiring far less infrastructure and services to boot, that it makes investing in such neighborhoods a slam-dunk from a cost/benefit perspective.  http://www.planetizen.com/node/53922

I'm sorry if anyone thinks I said the following:

 

 

So anyone who says neighborhoods like OTR or downtown need to "carry their own weight" don't realize that they're already subsidizing the rest of the city, and the city is subsidizing the suburbs, and the metro is subsidizing rural areas. 

 

I didn't say it. I'm going through the last few posts and don't see that comment from anyone. I'm just curious to know the distribution.

 

I'm sorry, I won't post on this topic further.

I'm sorry if anyone thinks I said the following:

 

 

So anyone who says neighborhoods like OTR or downtown need to "carry their own weight" don't realize that they're already subsidizing the rest of the city, and the city is subsidizing the suburbs, and the metro is subsidizing rural areas. 

 

I didn't say it. I'm going through the last few posts and don't see that comment from anyone. I'm just curious to know the distribution.

 

I'm sorry, I won't post on this topic further.

 

I don't think anyone has generated the exact map that you have asked for, but these may help: http://www.urbancincy.com/2013/02/cincinnatis-inner-city-neighborhoods-most-densely-populated-economically-powerful-in-region/

 

As you can see, the region's employment centers are in the urban core, and the city takes the money that is generated in the core and spends it on services all across the city. Effectively this means that the urban core is subsidizing the lower-density residential neighborhoods.

 

You seem to be claiming that if someone lives in Kennedy Heights but works downtown, their income tax revenue should be "credited" to Kennedy Heights. It doesn't make sense to me why you would assign someone's income to the neighborhood where they live, instead of the neighborhood where their employer (who is paying them that income) is located. And I'm not sure what "credited" even means to you, because all of the income tax goes into a general fund that is spent across the entire city.

I think City Data has that info if you search by location but probably not on a single map.

I disagree because I am not talking outside the city limits.  A city resident pays the same payroll tax whether he works in the city or not depending upon the need to share with the tax district in which he works. 

 

Certainly, if someone lives outside the city limits but works downtown, then downtown should get credit for the tax generation.  I hate to see the importance of the neighborhoods deminished.  Not everyone can, or should, or wants to live downtown.

 

Just an opinion.

 

The earnings tax is based on where the earnings were generated, not on the address of the employee.  I chose a KY city of residence for my example because it makes that distinction more obvious.  I don't think that makes the neighborhoods less important.  But with the way the taxes are currently structured, the home address of the employee is irrelevant.

An employee who does not reside in the city where they are employed nevertheless spends over 2,000 hours per year in that city.  They are benefiting from the police, fire, roads, and building code enforcement that they are paying for through their earnings tax. 

The earnings tax is based on where the earnings were generated, not on the address of the employee.  I chose a KY city of residence for my example because it makes that distinction more obvious.  I don't think that makes the neighborhoods less important.  But with the way the taxes are currently structured, the home address of the employee is irrelevant.

 

Is that really true?  When I lived in Hyde Park but worked in Anderson, I still paid city earnings tax.

If you live in the city and work in the city, you pay the tax.  If you live outside the city but work in the city, you pay the tax.  If you live in the city but work outside the city, you pay the tax.  The only way you don't pay the tax is if you live AND work outside the city.  If you live in one city but work in another, your payroll deducts and allocates the two city taxes proportionally.  You don't for example pay Blue Ash AND Cincinnati earnings tax. 

 

However, there are many small cities and chances are that you work in one of them and pay its earnings tax, even if you live in an unincorporated township.  And now even the unincorporated townships are levying earnings taxes.

 

Municipal earnings taxes only exist in about half of U.S. states.  In states that don't have them, that revenue is gathered through other taxes -- sales, property, gross receipts, etc.  And in some states, especially New York, city tax is part of your state tax return. 

 

If you live in the city but work outside the city, you pay the tax.

 

That's interesting.  I didn't know about that wrinkle.  Then just ignore my posts above regarding the earnings tax being representative of where the earnings were generated.  Apparently, it's not that simple after all.

A bunch of posts drifted from the streetcar (surprise!) to talking about municipal income taxes in Ohio. Here is the newly merged topic.

If you live in Cincinnati and work in Blue Ash (which has a lower tax rate), Cincinnati will credit you what you pay to Blue Ash, but you still have to pay Cincinnati the difference. 

Again, I never said that either.  I live within the city limits, and I want my neighborhood to be credited for my taxes.  I don't expect my neighborhood to benefit more than downtown or the other neighborhoods from my taxes.  Don't know what the ugh means.  Still don't know what you are saying.

 

I would like to see numbers though.  I'd like to see what the taxes generated from each area are.  I have a feeling you have them!  Please share if you do.  Maybe you could compare the entire UC/Hospital area with downtown.

 

LmLnCC0.jpg

 

Total income by census tract.

 

I could standardize it by area, or manipulate in another way if you want. But this gives you an idea.

If you live in Cincinnati and work in Blue Ash (which has a lower tax rate), Cincinnati will credit you what you pay to Blue Ash, but you still have to pay Cincinnati the difference. 

 

Correct.  Blue Ash is 1.25% and Cincinnati is 2.1%.  Do the math. 

 

And remember that although the earnings tax is a tax on your gross earned income, it does not tax capital gains, rental income, or many other types of income.  It's basically a tax on your hourly wages, tips, salary, or some combination of those three. 

 

I don't know if winnings at the Horseshoe are taxed or not. 

 

If you live in Cincinnati and work in Blue Ash (which has a lower tax rate), Cincinnati will credit you what you pay to Blue Ash, but you still have to pay Cincinnati the difference. 

 

That's how it works in Columbus. The city sends employers worksheets with the other municipalities in the county that collect earnings taxes and their rates. You subtract the amount that goes to the smaller city from Columbus' 2.5% then remit the difference to Columbus.

Some cities in other states have different tax rates for residents vs. non-residents.  For example if you live and work in Detroit you pay 2.5%, if you live in the suburbs but work in Detroit you pay 1.25%. 

 

Sure, these taxes suck, especially because it's a tax on your gross revenue, before any deductions.  But what sucks more is that the wealthiest people hardly pay this tax because their income is via rent or other investments.  So it's sort-of a regressive tax. 

I'm sure the wealthiest are paying their fair share.

I'm sure the wealthiest are paying their fair share.

 

Right, it's totally fair how wealthy people who inherit companies and apartment complexes pay less tax than poor people who hit the super lotto. 

You are really hung up on what others have.  You have no idea if they had to work for it or not.  All your posts deal with what others have.

 

Whether or not something was inherited, people are paying taxes on it.  If its a business, they are providing jobs.  If its an apartment, they are paying property taxes, and income taxes.

I'm not hung up on what people have, I'm hung up on how people like you defend when people are given things -- huge things. 

I was given quite a lot, as long as I worked hard.  I pay a lot of taxes.

Most things people inherit aren't huge things. I inherited some farmland but I'm not hanging out with the Walmart guys.

I feel like a total poser in Rural King. Although I have to go there more often than I expected.

You are really hung up on what others have.  You have no idea if they had to work for it or not.  All your posts deal with what others have.

 

Whether or not something was inherited, people are paying taxes on it.  If its a business, they are providing jobs.  If its an apartment, they are paying property taxes, and income taxes.

 

More tax breaks for job creators!

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