Ohio GOP looking to harass D-controlled cities by blowing a giant hole in their budgets:

https://www.dispatch.com/story/news/2020/11/08/ohio-income-taxes-covid-work-from-home/6185682002/

Quote

"We would have to lay off cops and fire firefighters across the State of Ohio," said Cincinnati Mayor John Cranley. "It would be disastrous. It would lead to crime and all kinds of problems." [...]

 

"This kind of a shock to the system would lead to massive layoffs," Cranley said. "These are extraordinary times. We're in the middle of a crisis. I don’t believe the General Assembly wants police and firefighters laid off throughout the state."

 

Meanwhile, back in reality: If we had a situation where Cincinnati's budget was cut by 50%, Cranley would still insist that the police and fire departments' budgets not be reduced by even $1, and all cuts would be taken from other departments.

13 hours ago, jmecklenborg said:

Ohio GOP looking to harass D-controlled cities by blowing a giant hole in their budgets:

https://www.dispatch.com/story/news/2020/11/08/ohio-income-taxes-covid-work-from-home/6185682002/

It does make sense to a certain point, if you are not using the city services you should not have to pay the tax. The question will then come as to what constitutes the true location, is it the main office or where the employee is located. Traditionally, it has been the location of the employee. 

 

Cincinnati has the most to lose by this as of all major cities in Ohio, there are more employees that cross the river than in other states.  The reasoning, even if the Ohio legislature is not able to repeal this rule, or the Court in Ohio hold up the current law that says work at home employees must still pay Ohio tax, there is still an argument over the Constitutionality of the law as it would apply to out of state workers who cross the border into Ohio. All the Kentucky and Indiana workers who work downtown or other places in Ohio on a regular basis would likely be exempt from this and no longer have to pay Ohio or Municipal tax, even if those in say Green Township who work downtown will still have to pay Cinti tax

28 minutes ago, Brutus_buckeye said:

It does make sense to a certain point, if you are not using the city services you should not have to pay the tax. The question will then come as to what constitutes the true location, is it the main office or where the employee is located. Traditionally, it has been the location of the employee. 

 

This is, in fact, one of the reasons my wife and I have considered moving out of Akron.  She works remotely for a corporation based in Dallas (no state or local income tax).  But because she's physically located in Akron, she pays Akron income tax of 2.75%, one of the highest in the state.  Her take-home would climb by many thousands if we headed out to one of the townships.

 

If the Democrats really want to argue that where the corporate office is located should control, rather than where the employee either lives or works, we're all ears in my house!

Just now, Gramarye said:

 

This is, in fact, one of the reasons my wife and I have considered moving out of Akron.  She works remotely for a corporation based in Dallas (no state or local income tax).  But because she's physically located in Akron, she pays Akron income tax of 2.75%, one of the highest in the state.  Her take-home would climb by many thousands if we headed out to one of the townships.

 

If the Democrats really want to argue that where the corporate office is located should control, rather than where the employee is located, we're all ears in my house!

That would be devastating for all of the state and employees. That means everyone working in Ohio at Amazon will have to pay Seattle taxes, everyone working at Target will pay Minneapolis taxes, all Macy's employees would pay New York taxes, under that theory.

 

Fortunately, the Supreme Court has already said that such a tax scheme on the Federal level is not kosher, so we really dont have to worry about that happening, but as mentioned, it could be an issue when talking about workers who have to cross state lines. 

47 minutes ago, Brutus_buckeye said:

It does make sense to a certain point, if you are not using the city services you should not have to pay the tax.

 

That's simply not how taxes work. I have no kids and yet I pay a huge amount of money into local school districts that I will never directly benefit from.

10 minutes ago, taestell said:

 

That's simply not how taxes work. I have no kids and yet I pay a huge amount of money into local school districts that I will never directly benefit from.

 

Sure, but at some point, there has to be a jurisdictional nexus between the taxing jurisdiction and the individual or entity to be taxed.  That is how taxes work.  For 2020, of course, people had generally at least started the year working in a jurisdiction.  But for 2021, there are at least going to be some people who work from home Jan. 1 and never, for the entirety of 2021, go into the downtown office or other workplace within the city limits that they used to go to.

As long as your company keeps an office for you in the city, you should be considered as working in the city IMO. 

 

On a temporary basis, you aren't charged income tax for that city. I go to job sites in Columbus quite frequently, but I don't pay taxes there because it isn't my main location. The folks working on site do pay taxes to Columbus, because that's where they typically work.

 

It's not about where your corporate office is located, though it's where you are located, and a temporary move shouldn't be considered for tax purposes. If Fifth Third closes their downtown office and tells employees they are now working from home for good, then they should not be paying Cincinnati income taxes.

 

Ohio should have no appetite for such a move. It might help some of their voters in townships, but it will create chaos in the state, and suddenly the state will have to bail out cities. It's so laughably shortsighted that I bet they really do it.

10 hours ago, taestell said:

Meanwhile, back in reality: If we had a situation where Cincinnati's budget was cut by 50%, Cranley would still insist that the police and fire departments' budgets not be reduced by even $1, and all cuts would be taken from other departments.

While that is definitely what Cranley would do, this is how this argument MUST be framed.  Republicans win on messaging, why can't the Democrats play the same game?

 

In fact, it would have been even better for Cranley to say that this bill "Defunds the Police"

Edited November 10, 20204 yr by 10albersa

22 minutes ago, ryanlammi said:

As long as your company keeps an office for you in the city, you should be considered as working in the city IMO. 

 

On a temporary basis, you aren't charged income tax for that city. I go to job sites in Columbus quite frequently, but I don't pay taxes there because it isn't my main location. The folks working on site do pay taxes to Columbus, because that's where they typically work.

 

It's not about where your corporate office is located, though it's where you are located, and a temporary move shouldn't be considered for tax purposes. If Fifth Third closes their downtown office and tells employees they are now working from home for good, then they should not be paying Cincinnati income taxes.

 

Ohio should have no appetite for such a move. It might help some of their voters in townships, but it will create chaos in the state, and suddenly the state will have to bail out cities. It's so laughably shortsighted that I bet they really do it.

It is about nexus and where you are classified as working and where the income is generated from. 

That is the debate. If you work for 5/3 at a branch in Blue Ash, you are paying Blue Ash taxes not Cincinnati taxes.

 

If you work and have a permanent desk downtown but work 80% of your time in the field or remotely, there is still a nexus to the HQ because you technically have a permanent desk there, but there is an argument to be had as to which jurisdiction should have a claim to those tax dollars. 

 

If 5/3 were to classify that employee as fully remote, and does not intend to bring them back to the downtown office, then, even though they support functions going on downtown at the HQ, they would not likely meet the nexus test to be liable to pay city taxes. 

 

There is a lot of gray area to sort out here.  The bigger point is that from a state law point, the state could save many of the municipalities these tax dollars because the state can arguably create its own nexus test. This is a state matter on a lot of these concerns and the State of Ohio can treat their local municipalities how they choose. It is a political conversation to have on that matter.  Therefore if you work for Huntington Bank in Columbus or Key Bank, it may not hurt the worker too much in that regard.

 

Cincinnati stands to be effected most by this, because there are now Federal issues that come into play when that 5/3 remote worker lives in KY or IN. They have a federal argument that they would not be required to pay city of Cincinnati taxes (and likely be successful in that arguement). You would not have much of this to worry about in Columbus, Cleveland, Dayton, and Akron given their locations.

7 minutes ago, Brutus_buckeye said:

Cincinnati stands to be effected most by this, because there are now Federal issues that come into play when that 5/3 remote worker lives in KY or IN. They have a federal argument that they would not be required to pay city of Cincinnati taxes (and likely be successful in that arguement). You would not have much of this to worry about in Columbus, Cleveland, Dayton, and Akron given their locations.

 

If you are currently working remotely on a declared temporary basis and maintain an office in a city, even if it is in another state, the state/city with the office has a good argument for maintaining an income tax. Saying the people would be successful in their lawsuit is pure speculation on your part, and I'm sure you haven't looked enough into the case law to form such a strong opinion.

 

If Ohio did change the laws for Ohio residents to petition that they don't pay taxes while working remotely, then the residents of another state would certainly have good standing IMO to ask for the same treatment.

1 minute ago, ryanlammi said:

 

If you are currently working remotely on a declared temporary basis and maintain an office in a city, even if it is in another state, the state/city with the office has a good argument for maintaining an income tax. Saying the people would be successful in their lawsuit is pure speculation on your part, and I'm sure you haven't looked enough into the case law to form such a strong opinion.

 

If Ohio did change the laws for Ohio residents to petition that they don't pay taxes while working remotely, then the residents of another state would certainly have good standing IMO to ask for the same treatment.

You are right, I am not stating it as a matter of fact, however, the problem with Cincinnati, is that whey you have a KY or IN resident, you now have a Federal issue and there is a history of Federal Courts holding home offices as the place where business is being done for purposes of claiming where taxes are collected. For example, a sales person for Microsoft who lives in cincinnati and represents corporate clients in the region would not pay Seattle/Redmond WA income tax even though they may travel to corporate office in Redmond WA on a monthly basis.  It is not a stretch to say that a 5/3 employee now doing 80-90% of their work from home in KY, could qualify as a home worker and even though they go to corporate a few times a month, they would not be required to pay Cincinnati taxes. 

The Ohio Supreme Court ruled that the appliction of Cleveland's jock tax was unconstitutional too. So there is a strong argument that can be made for employees who used to have to cross borders but no longer need to, and the state of Ohio could be on the losing end there, hurting Cincinnati.

 

^it's no longer the case now, but it's absolutely ridiculous that the states and feds didn't act much more quickly on imposing state sales taxes on internet retailers in the 90s and early 2000s.  It gave internet retailers a preposterous advantage over local retailers that really hurt small businesses like camera stores (which don't even exist anymore), music shops, hobby shops, etc.  

Edited November 10, 20204 yr by jmecklenborg

^Another example of government picking winners and losers.

Yet another extremely high income earner threatening to leave California for Las Vegas and/or Texas.  This guy claims that he will save $600,000/year.

 

 

^Yes, I'm sure this guy with 1m subscribers makes >$4.5m a year lmao

Something that these people leave off is the federal tax credit for living in a high tax area that existed until this year and will probably come back soon. If I remember the story right you could claim up to just under $100K for that. $100K goes a long way toward state and local taxes.

6 minutes ago, GCrites80s said:

Something that these people leave off is the federal tax credit for living in a high tax area that existed until this year and will probably come back soon. If I remember the story right you could claim up to just under $100K for that. $100K goes a long way toward state and local taxes.

I dont know about that. It wont really come up for discussion until 2024 at the earliest. I think many in the GOP are strongly in favor of it and like anything, the more people get used to it the more permanent it becomes.  

 

I think initially you saw this in the Blue wave in CA house seats in 2018 where Orange County was routed. The tax break was huge for people there and their GOP Congressman let them down in those areas so the seats flipped. Some of them have started to flip back.  So that was the initial reaction. Now we are 3 years in and there is a level of acceptance of these new rules (and people paying the higher taxes) and you are starting to see people adjust their behavior, espeically high profile people.   People are fleeing California, but they are also fleeing New York. While you hear about the  big city flashy people who move, there are a heck of a lot more in places like Syracuse and Rochester and temequla who may be off the radar but are also taking their tax dollars with them.

I don't think a lot of people understand how much it sucks to be a rich person that lives out in the middle of nowhere. One thing I learned very quickly after moving to West Virginia for a couple years is that even if you are rich there there's no rich people things to do. There is no support for rich people since they are so scarce. You have to go to Columbus to spend money at all. Buy a rich person's car like an exotic or a Rolls? Sorry there's only one place in the entire state that works on it. Or you have take it to Columbus. Want to put it on a racetrack? Back to Ohio you go or 6 hours east in the Eastern Panhandle. Want a nice meal out? You're going to the same place every time! You have to buy everything at Wal-Mart since it's the only store. No good golf courses around; no one to tend to your pool. Everyone you meet is poor and wants money from you.

 

There's NO point in being rich in many places.

I think the "people are fleeing big cities!" and "California is dead!" thing is waaaay overblown. There were also a ton of articles recently about the fact that Elon Musk moved to Texas because California isn't "respecting" "innovators" anymore or something.

 

People have always wanted to live in places that offer cultural amenities and have always been willing to pay a higher price to do so. That isn't dying just because of the pandemic or some relatively minor change in federal tax policy.

29 minutes ago, GCrites80s said:

I don't think a lot of people understand how much it sucks to be a rich person that lives out in the middle of nowhere. One thing I learned very quickly after moving to West Virginia for a couple years is that even if you are rich there there's no rich people things to do.

I think you picked the wrong part of West Virginia.  There is a lot of "rich people stuff" in the eastern part of the state and the adjoining rural Virginia counties. You would not take your Rolls or exotic when you move, however; you would take your Jimmy pulling a horse trailer.  😉

Yes, I was in the western part of the state. I know what you mean about the Eastern Panhandle, The Greenbrier and the whole D.C. retreat aspect.

13 hours ago, jmecklenborg said:

Yet another extremely high income earner threatening to leave California for Las Vegas and/or Texas.  This guy claims that he will save $600,000/year.

 

They're not very smart. Ranting about how he wants to leave because everybody in California is on government assistance. California ranks 33rd for percentage of the population on government assistance. Texas is 20th. Florida is 15th. That doesn't even include social security. I'm sure Florida would rank number one in that category. 

^the Federal tax structure is very progressive in part to offset how regressive all state tax structures are.  The difference between "high" and "low" tax states is how regressive their particular structure is.

 

In related news, Tennessee is phasing out their "Hall Tax", which is a state tax on capital gains.  Meanwhile the sales taxes are creeping up on 10% in some Tennessee counties.  Some of the sales taxes act like a VAT, i.e. taxing both the ingredients AND the food prepared with taxed ingredients.  I just went through a McDonald's drive-thru in Nashville two weeks ago and a #3 combo was $8.80, about $1.50 more than anywhere in Ohio.  

2 hours ago, taestell said:

People have always wanted to live in places that offer cultural amenities and have always been willing to pay a higher price to do so. That isn't dying just because of the pandemic or some relatively minor change in federal tax policy.

This is what is missing in this discussion, and will be familiar to the SimCity players among us.  Taxes, like prices, are affected by demand.  If there was a real crisis of taxes being the sole reason people are moving away, they would be reduced in order to stop the bleeding and bring new people in.  But CA and NY are so rich in these 'cultural amenities' that the taxes have not reached that point of needing a reduction.

 

Housing prices in CA and NY are still sky-high, despite the migration away.  The fact that they are this high signals to me that taxes are not an issue in these states, cost of living, due to high desirability, is.  There's still plenty of demand to live in these desirable places, despite the high tax rates.

 

Anecdotally, if family where not a consideration, I'd gladly move to one of the high tax states, and tax cost would be near the end of my list of things to consider when moving.  Typically, that high-tax area also means top-notch public services, mass transit, schools, parks.  All things that attract me to a city in the first place.

^SimCity does have that phenomenon built in though. If your city gets X size then you'd better have amenities such as the amusement park, stadium, the big park, zoo that if you don't build them the residential population will stop growing. It will hurt commercial growth too, but to a smaller degree. Low taxes won't get you out of it.

On 12/16/2020 at 12:04 PM, taestell said:

I think the "people are fleeing big cities!" and "California is dead!" thing is waaaay overblown. There were also a ton of articles recently about the fact that Elon Musk moved to Texas because California isn't "respecting" "innovators" anymore or something.

 

Very true.  And a good chunk of the wealthy and successful, but not billionaires, are grabbing places in Idaho, Wyoming etc to escape the CA Franchise tax board, but are actively seeking "downsized" homes in Southern California areas outside LA (Palm Springs, Santa Barbara, Calabassas).  The reality is the baby boomers are all moving into retirement and cashing out of of their homes they raised their kids in.   Conservative media is turning this into something more than it actually is...

Then the downsized houses go up and the big ones go down. No way to win. My family in California has been there since at least the late 1800s and builds houses in their orchards that they've owned since before the 1950s. That's about the only way to beat the system.

On 12/16/2020 at 11:24 AM, DarkandStormy said:

^Yes, I'm sure this guy with 1m subscribers makes >$4.5m a year lmao

 

He somehow came to buy over 20 single-family houses in the LA area by age 28~.  He claims that he started with nothing but I don't believe the origin story.  In one video they talk about his wife's family having worked in property management, advice from his father-in-law, etc., so that's where the help came from (and no doubt hard cash was part of the "help" but we don't hear about that).  He also talks endlessly about Tesla and bought a ton of Tesla stock years ago and made $1 million or more off that.  HIs net worth is already north of $20 million so it's a bit ridiculous that he's obsessed with potential tax savings - I don't get why he and others like him who were super-super lucky in their 20s don't just retire.  

 

The bottom line is that he wouldn't have made nearly as much money in real estate if he a) didn't happen to live in Southern California or b) gotten his start at the bottom of the great recession, like his counterpart Graham Stephen.  I mean, if he had started just 2 years earlier he almost certainly would have been wiped out.  And if he had been living in Dayton or Canton he wouldn't have experienced $200k+ appreciation on every property he bought back in 2012~.  He was able to borrow against that equity for down payments on his next properties.  By comparison, I just did a cash-out refinance in May 2020 on my house that I bought here in Cincinnati in 2015 for $125k and was only able to get $23,000 out.  

 

A lot of criticism of Bigger Pockets and the Fire people is that a ton of them got their start 2008-2011 AND lived in the markets that got super-hot by 2015.  They often lucked into their first "deal" IN ADDITION to those other factors that existed nowhere in 45 out of 50 states.  

Edited December 18, 20204 yr by jmecklenborg

3 hours ago, jmecklenborg said:

 

He somehow came to buy over 20 single-family houses in the LA area by age 28~.  He claims that he started with nothing but I don't believe the origin story.  In one video they talk about his wife's family having worked in property management, advice from his father-in-law, etc., so that's where the help came from (and no doubt hard cash was part of the "help" but we don't hear about that).  He also talks endlessly about Tesla and bought a ton of Tesla stock years ago and made $1 million or more off that.  HIs net worth is already north of $20 million so it's a bit ridiculous that he's obsessed with potential tax savings - I don't get why he and others like him who were super-super lucky in their 20s don't just retire.  

 

 

Guys like that go positively bonkers when they convert percentages to their own absolutes. .01% translates to some completely unacceptable number like $50,000. Then they repeat that number over and over to themselves. Fifty thousand dollars... FIFTY THOUSAND dollars... FIFTY THOUSAND DOLLARS!!!!!!!!!!!!!!!!

 

They literally cannot put it back into perspective of .01%. This is why they turn into psychopaths. And why they get divorced.

On 12/16/2020 at 12:04 PM, taestell said:

I think the "people are fleeing big cities!" and "California is dead!" thing is waaaay overblown. There were also a ton of articles recently about the fact that Elon Musk moved to Texas because California isn't "respecting" "innovators" anymore or something.

 

People have always wanted to live in places that offer cultural amenities and have always been willing to pay a higher price to do so. That isn't dying just because of the pandemic or some relatively minor change in federal tax policy.

There was a net migration loss of 135,600 from July 2019-2020 in California. That seems pretty significant to me. I imagine it's gotten worse since then.

Personally, I could see why certain people are leaving California. The home prices and general cost of living is ridiculous. On top of that, the highest state taxes in the country and some of the highest local taxes, particularly for those who make over $1M a year. The people most likely to leave California I think are those who are already established in their career and are rich. They don't need to go out there and network with other people in tech or Hollywood and try to make it big. It's a fact, a lot of wealthy people and corporations are leaving for other states, particularly Texas. Companies like HP and Oracle already packed up and moved there. Eventually, more regular people will follow because that's where the jobs and affordability will be. 

It's not just because of taxes. People are sick of not having the freedoms they used to enjoy. I'm not some die-hard Republican or anything but I think if I lived in California, Gavin Newsome and Eric Garcetti's policies would drive me bonkers! Then you have that dum-dum DA George Gascon trying to get rid of the bail system, if he hasn't already. Businesses are open, then they have to close, then they can open again if they spend thousands of dollars they don't have to comply with new safety/health measures... except syke, you have to close again! People in Ohio complain about DeWine's policies but they don't know how ridiculous the lockdowns and new laws can get. They just imposed a new law in Los Angeles County stipulating that you can't have TVs on, at your restaurant's outdoor patio. Why? The prospect of folks huddling together to watch a basketball game 🙄 It sounds like at this point, a lot of folks in California are more concerned about their own mental wellbeing than getting Covid. For how high the taxes are in California, they have a lot of problems. 1/4th of our country's homeless population lives in California. They're practically everywhere, defecating in the streets. 

What great amenities does LA have that medium size cities like Columbus, Denver, Austin, and Salt Lake City don't, and would warrant the high housing prices and taxes? I'm sure you could list some but chances are, it would take you an hour or more each way to get to a lot of those amenities. I don't like sitting in a car all day to get from A to B. I think most people would look at quality of life, not amenities. It's not a hotel room. Personally, I'd much rather live in a medium size city and pay a fraction of the cost of living. Mega-cities like NYC are LA aren't as practical or necessary as they used to be.

Edited February 9, 20214 yr by David

7 minutes ago, David said:

There was a net migration loss of 135,600 from July 2019-2020 in California. That seems pretty significant to me. I imagine it's gotten worse since then.

I'd like to see the age demographics of these people leaving.  I personally 5+ boomers who are cashing out of their California homes for a downsized retirement in states with cheaper real estate.  

Yeah, me too. It would be really interesting to see the net migration trends by demographic for all of the states. Especially in these polarizing times and after Covid. I don't doubt that boomers are retiring and moving to cheaper states like TX, AZ, NV and the like, but you know when cultural juggernauts like Elon Musk and Joe Rogan say or do something, they have millions of fans and a lot of peers in their respective industries, who are on board. They both moved to Austin from LA. 

Edited February 9, 20214 yr by David