Lydia Leads, Epic Fail 2, The Campaign Pledge

November 16, 2012

The Courier Editorial Board has already addressed the long list of failures of the Mayor and Findlay City Council in their effort to make permanent the increase in the city income tax.  But the Courier did not mention the Mayor Mihalik’s biggest failure, the campaign pledge during her race for Mayor that the City of Findlay did not need to make the temporary ¼% income tax increase permanent.

The Courier was dead wrong when they wrote “Most people will accept her about-face”.  The Courier can apologize all they want for the Mayor’s flawed judgment.  Politicians need to be held accountable for the promises they make in “the heat of a campaign”.  It seems clear that Mayor Mihalik’s campaign pledge casted a long shadow over the effort to pass the income tax renewal.  The Mayor’s campaign pledge set up unrealistic expectations in the minds of her voters, it diminished her credibility once she did her homework and faced the reality of Findlay’s fiscal problems.

Mayor Mihalik was the only candidate for mayor to promise not to seek a renewal of the income tax.  All of the other candidates looked at the same facts and came to this same conclusion; the tax increase was necessary, not an easy thing to say for anyone running for office.  Was the Mayor’s campaign position based purely on ideology, was it her ego that drove her to believe she could simply outsmart the problem or was she simply unable or unwilling to back off a campaign pledge that give her an advantage in her run for the mayor’s office?

Whatever the reason, Mayor Mihalik’s failed judgment has done real damage to the City of Findlay.  So now Mayor Mihalik needs to put forward a plan to fix it.  Time for Lydia to lead!

See Findlay Courier Editorial “Defeated” here: http://www.thecourier.com/opinion/editoral/2012/Nov/08/ar_ed_110812.asp?d=110812,2012,Nov,08&c=e_0

See Findlay Courier Editorial “About Face” here: http://www.thecourier.com/opinion/editoral/2012/Jul/05/ar_ed_070512.asp?d=070512,2012,Jul,05&c=e_0


Lydia Leads, Epic Fail, City of Findlay Income Tax

November 8, 2012

The Editorial Broad of the Findlay Courier got it one hundred percent right.  Findlay Mayor Lydia Mihalik’s campaign for the city income tax was a disaster.

Read the editorial here: www.thecourier.com/opinion/editoral/2012/Nov/08/ar_ed_110812.asp?d=110812,2012,Nov,08&c=e_0


Findlay’s Income Tax: Unsustainable and Anti-growth

October 16, 2012

Demographics, the Decline of the Middle Class and the Wage (Income) Tax

In the run up to the November election for issue #3, the City of Findlay’s request to make the quarter percent temporary income tax permanent (for a total rate of 1.25%) has been hotly contested.  The debate over the tax renewal largely revolved around the question of whether Findlay has a spending problem or a revenue problem.  After a two hour meeting with the City of Findlay Auditor Jim Staschiak II, I discovered that the City of Findlay has a demographic problem.  This demographic problem could be systemic and long term.

In an effort to explain Findlay’s financial position, Mr. Stashciak produced a graph he named “What’s the Employment Trend?” that illustrates that the number of employed individuals in Hancock County dipped in 1999 and has remained flat ever since, while total population continued a slow but steady rise.

Our population is aging, which is not really big news.  But, when you add in other demographic and economic factors and you understand how the City Income Tax really works, we may find that the City Income Tax cannot sustain the City of Findlay’s operations or capital improvements.

Let’s start with the City Income Tax.  First, the City income Tax is really a wage tax.  The income tax does not tax investment income, pensions or social security income.  And while the city income tax does tax businesses, the revenue that the City of Findlay receives from businesses is just a small percentage of revenue collected from the income tax.  This disparity between what businesses pay and wage earners pay means that workers, in effect, pay the city tax for the services they use and for the businesses where they work.

The second thing we need to know is that with the elimination of other taxes like the tangible property tax and the estate tax and the cut backs in state revenue sharing, the city wage tax has become the primary source of city financing.

So, we already know that our population is aging which means that fewer people are directly supporting the finances of the city.  But a key number that I do not have is the per capita wage tax receipts.

With fewer workers supporting a larger population we are already starting in a hole.  But what if those workers are, on average, making less money?  Given the transition we have seen in Findlay of manufacturing jobs to the service industries and knowing that at least one major manufacturer in Findlay has a two-tier wage system, average wages could very well be in decline.  This combination of aging population and a workforce with a declining income or income that is not keeping up with inflation could spell real trouble for the City of Findlay.

If my hypothesis is right, the per capita wage tax receipts are in fact declining, that would mean the City of Findlay will be in a constant battle to match revenues with services.  It would also mean the traditional way of fixing a city’s flagging finances through growth could, in fact, make matters worse.

If we add businesses or build out subdivisions in Findlay that attract residents and workers that earn less and therefore pay less than our current per capita tax receipts, we would only be dragging down the average, making it harder for the City of Findlay to maintain its current level of services and provide service to support the growth.

We need to put some real math behind this issue.  We may find that the current tax base for the City of Findlay (and other cities in Ohio) that relies on a wage tax is unsustainable and anti-growth.

To find the graph referred to above and other information about the City of Findlay’s finances see the Auditor’s webpage: http://www.ci.findlay.oh.us/?id=57


The City Income Tax and Trust Fund Babies

September 7, 2012

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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