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.


Higher Local Taxes Thanks to Gov. Kasich and Rep. Sprague

March 28, 2012

Higher local taxes are in your future thanks to Governor Kasich and Representative Sprague.  The elimination of the Estate Tax will cost the City of Findlay about .8 million dollars a year in lost revenue.  That is about 3.3 % of the city’s annual budget.  It may not seem like much, but when you add to that the loss of other sources of state funding and the roll back of the quarter percent emergency city income tax, the city of Findlay is facing a $4.9 million shortfall for the year 2013.

Rep. Robert Sprague and The Courier acknowledge that local taxes are bound to go up, but they believe that trading state taxes for local taxes is a good deal for the citizens of Ohio and Findlay.  I fail to see how trading one tax for another makes Ohio more competitive.

For a Governor that has his sights set on a presidential run in 2016, cutting the Estate Tax is all gain and no pain.  Governor Kasich can stick a nice feather in his cap by cutting the Estate Tax, long the whipping boy of the Republican Party.  Then Kasich will let local governments and local tax payers make up the loss of revenue.  Cutting the Ohio Estate Tax will play well with the Republican base at the national level, but where does it leave the Ohio tax payer?

I would ask; are Ohio’s Republican lawmakers using this budget crisis not only to shift the burden from the State to the Local level, but more importantly to shift the total of our state and local revenues to a less progressive and a more regressive tax system?   Elimination of the Estate Tax is the keystone in the Republican plan to shift a greater tax burden from the wealthy to working families.

In an environment where the state government is pinching local government at both ends with decreased funding and increased unfunded mandates to close the state’s budget gap, cutting the Estate Tax and placing a high tax burden on working families, in favor of the wealthy, seems irresponsible and wholly unfair.

Courier Editorial “Unbalanced”: http://www.thecourier.com/opinion/editoral/2012/Mar/23/ar_ed_032312.asp?d=032312,2012,Mar,23&c=e_0

Courier Editorial “Balancing Act”: http://www.thecourier.com/opinion/editoral/2011/Jun/21/ar_ed_062111.asp?d=062111,2011,Jun,21&c=e_0


Rep. Sprague Supports Job Killing Regulation

February 6, 2012

Recently on the WFIN “Good Mornings” show with Chris Oaks, State Representative Robert Sprague-R stated that Ohio would have the world’s best regulation of the oil and natural gas drilling industry.  It would seem that Rep. Sprague did not get the memo from his Republican party that regulations kill jobs.  The GOP is right you know, regulations do kill jobs.

Take the oil and natural gas drilling industry, any regulation to protect the environment, whether to protect the water table or that restricts drilling operations in seismically unstable regions, will kill jobs.  It may make some wells too costly to operate or the added costs could put some marginal drilling companies out of business.  Whole sections of our state could be off limits to drilling because of the risk of seismic activity caused by drilling operations.  In all of these cases, jobs will be killed.

So, why would Rep. Sprague support regulating the oil and gas drilling industry?  Well, slogans like “Job killing regulation” may win votes, but slogans do not make for good public policy.  In the real world, government regulations protect consumers, the environment and regulations protect industry for itself.

The classic example of the government regulation that was at the foundation for a whole new industry is the FAA (Federal Aviation Administration).  In 1926, the pioneers of civil aviation came to the federal government asking to be regulated.  They believed that without federal safety standards the public would never perceive flying to be safe enough to support civil aviation as a viable business.  The FAA and business worked together to build public confidence in civil aviation.

This is the lesson that Rep. Robert Sprague is trying to apply to the oil and nature gas drilling industry.  The market cannot regulate itself; the incentives run 180 degrees in the wrong direction.  In the long-term, effective government regulation is essential to a healthy marketplace.  The question for Rep. Sprague is, how can one be an effective legislator when you belong to the party that puts simple minded political slogans before sound public policy?  “GOP slogans kill good government”.


Class Warfare in Ohio

November 7, 2011

Kasich characterized public employees as enjoying benefits that many other people do not.

“I’ll bring up a single mom with a couple of kids. She’s working. She doesn’t have good health care. She’s paying a lot of money for it. She doesn’t have a guaranteed pension. If she’s lucky, she has a 401(k). If she’s lucky,” he said. “And we expect her to pay for somebody else that doesn’t want to pay for their own? Is that just? Is that right?”  The Courier, October 11, 2011

If Governor Kasich was working to improve the pay and benefits of the single mother that he described above I think many in Ohio including myself could get behind that.  But this is not what Senate Bill 5 is about.  The Governor and the Republic party are pursuing a divide and conquer strategy of class warfare.  They would pit those who have felling out of the middle class or are desperately trying to maintain their foothold in the middle class, against families that are trying desperately to maintain their foothold or clime their way into the middle class.

It is as brilliant as is crude and cruel, to use our fears about the future to convince us to turn on ourselves.  The Governor like many powerful and wealth in our county are convince that road to stronger US economic is though sacrifice by working family, that the middle class most accept a lower standard of living for the benefit of our nation.  But we need to ask ourselves who really benefits as we pursue this race to the bottom?  Who really benefits from a declining cost of labor, from a declining middle class standard of living?

Don’t take the bait.  If you going to though tough time the road to a better times for you and your family does lie on the path of pulling down your neighbor.  The path to American prosperity is not to lower our wages to meet China’s wages or to match the wages of the lowest pay among us.  This is not time for the middle class to pull itself part.  This is the time to total rethink the raw deal that we have been handed by John Kasich and the Wall St. class.

Stand up for America, stand for the middle class, and stand up for your future.  Vote NO on issue 2.


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