Administrators of two area cities say they would oppose any proposed move by Gov. John Kasich and his administration to shift municipal income tax collections from local municipalities to Columbus.
In recent weeks, members of Kasich’s administration suggested in the future that the state would assume collection of municipal income taxes, which would total more than $4 billion. Lt. Gov. Mary Taylor told a panel earlier this month the move would cut red tape for businesses operating in multiple locations.
State Taxation Department spokesman Gary Gudmundson explained State Tax Commissioner Joe Testa made similar remarks to Taylor at a recent tax seminar, according to a Cleveland Plain Dealer article, but they were “an exploration of the possibility” that the state would take over municipal tax collection.
Wapakoneta Mayor Rodney Metz said he would oppose any move to wrestle income tax collection from the city.
“I think the municipalities need to control their own destinies and in order to do that we need to have control over our own funds — whether it be fresh water, wastewater, electric, refuse or income tax,” Metz said. “The best way for the city of Wapakoneta to control its own destiny, the best way to know things are being done right and the residents are being treated fairly is to do these things ourselves.”
The city collected $2.12 million in income tax for 2010 and has collected $1.47 million through eight months this year.
The mayor disagrees with Taylor’s argument that there is a problem with small businesses having to deal with multiple income tax rates since most companies use computers and financial software to calculate income tax burdens by their employees.
Another issue to consider is reciprocity — where cities permit employees to pay income tax in the place they work and not where they live.
He also said a company investigating the possibility of locating in Wapakoneta, where the city income tax is 1 percent, recently chose another location where the income tax rate was 1.5 percent — so the income tax rate likely does not have a significant impact on the place a company locates a business.
The mayor also fears the Kasich administration may move to make all municipal income tax levels the same, even though no one in the governor’s cabinet has suggested that move.
“They also may require all municipalities to charge the same rate, which I don’t think is fair to our residents,” Metz said. “If the state could do that, local residents could see an income tax increase without having the chance to vote on that increase.”
Wapakoneta’s 1 percent income tax is lower than most neighboring municipalities. It would require a city-wide vote to increase it above 1 percent.
Metz also said he is concerned that if the state collects the municipal income tax then they will take a percentage to cover their costs — an amount he anticipates would be higher than it would cost to do locally.
The state already collected approximately $347 million in income taxes and charges the school districts $5 million in an administrative fee.
Metz also voiced concerns about the local community being able to respond more quickly to an income tax concern by a resident or in the case of delinquent cases.
St. Marys Safety-Service Director Tom Hitchcock said this is not a new idea and it has been discussed several times in the past, but he believes municipal income tax collection would be handled better locally and the city would be more “customer friendly.”
“Just dealing with the state usually their involvement doesn’t make anything run smoother, at least in my dealings with them,” Hitchcock said. “There are some good people there and some good departments, but you get less personalized service and it is usually harder to deal with them.”
Hitchcock said he has difficulty responding to the latest hints at the proposed shift since “there is no written proposal to consider and it is just speculation at the moment.”