The City Income Tax and Trust Fund Babies


What Every City Councilperson (and everyone else) should know about the City Income Tax.

A few weeks ago Charles W. Weasel, a local Attorney, wrote a letter to Findlay City Council suggesting a fix to the City of Findlay’s budget crisis.  A crisis largely caused by the decrease in State funding.  His idea; change state law to permit the city income tax to include taxing interest and dividend income as well as wages.  As Mr. Weasel wrote “Currently only the “working man” pays the Findlay City Income Tax.  Wealthy retirees and “Trust Fund Babies” are given a free ride at the expense of the wage earner.”

Of all the inequities built into the city income tax (look for future posts on the other inequities) the fact that wages are almost exclusively taxed, while interest, dividend and capital gains income are not, seems blatantly unfair.  A very wealthy person whose income comes solely from inherited investments could live their whole life in Findlay and never pay a dime in city income tax.  Findlay City Councilperson Anne Spence was so impressed with the idea that she promised to pass it on to Ohio State Senator Cliff Hite-R and Ohio State Rep. Robert Sprague-R, quoting chapter and verse of the Ohio Revised Code Section that would require changes to accommodate adjusting the City Income Tax.

Of course this proposed change to state law is NEVER GOING TO HAPPEN and Miss Spence should probably know that.  There are two reasons that the GOP controlled Ohio State government is never going to allow cities to tax investment income.  The first reason is a matter of mechanics.  Collecting and administering a flat income tax on wages is relatively easy.  Adding investment income to the mix would require every city to set up its own version of the IRS.

But, Mr. Weasel stumbled on the real reason why Gov. Kasich, Senator Hite and Rep Sprague are playing this taxation shell game in the first place.  Mr. Weasel and Miss Spence, the reason your city income tax is going up is because the city income tax does not tax investment income.  The GOP plan from the beginning is to shift the totality of municipalities and state taxes from investment income, (the rich) to wages (Ohio’s working families).  On top of that, they are cutting progressive taxes like the estate tax and the state income tax only to force increases in city taxes that are a flat rate tax.  So, the lowest paid worker pays the same rate as the best paid wage earner in the city.

If Miss Spence was paying attention to her Republican playbook she would know that cutting taxes on the wealthy and their investment income, not raising their taxes, is fundamental to the GOP’s game plan.

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One Response to The City Income Tax and Trust Fund Babies

  1. oxcamel says:

    Thanks for pointing this out. I had never thought about city income taxes being only on income. The continuing effort to represent cutting taxes at the higher levels of government while passing the tax burdens to the local levels will allow the more wealthy areas to continue to grow and profit, while the less affluent areas will continue to flounder.

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