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Worthwhile effort | The Columbus Dispatch

http://www.dispatch.com/content/stories/editorials/2012/06/04/wor...

Worthwhile effort
Standardizing Ohios welter of local taxes could ease burdens on business
Monday June 4, 2012 6:09 AM
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State lawmakers who are patiently making the case for a saner way of levying municipal income taxes in Ohio deserve credit. Their friends in city and village government are deeply skeptical of such change, and there cant be many Statehouse issues more eye-glazing than this one, which centers on concepts such as how to define net operating loss carry forward. But Rep. Cheryl Grossman, R-Grove City, and others know reforming income-tax collections could remove one of the greatest headaches facing those who do businesses in Ohio. She and Rep. Michael Henne, R-Clayton, in March announced their intent to pursue reform and have been holding meetings on the issue. The problem is that Ohios strong home-rule orientation allows communities not only to set their own income-tax rates, which is an appropriate accommodation to differing local circumstances, but also to establish policies such as what constitutes business income and residency. Its easy to see the paperwork nightmare this presents to a business with operations in more than one Ohio municipality: They can spend a fortune in time trying to sort out how many hours their employees worked in various communities, then applying each communitys unique tax code to those hours. At the March announcement, a president of a Minster, Ohio, business showed reporters more than 40 income-tax returns his office had processed recently, including one for 13 cents. Grossman believes that, with at least 600 taxing jurisdictions and 300 different income-tax forms, Ohio is by far the most challenging state in the nation on how thats done. It is one of only 10 states that allow municipalities to assess local income taxes. Not surprisingly, the reform effort has the enthusiastic backing of business groups, including the National Federation of Independent Business and the Ohio Society of CPAs. Less certain is the Ohio Municipal League, whose members worry that giving up any of their income-tax autonomy could mean lower revenues. Their concern is understandable, considering that most cities and villages get 70 percent or more of their funding from income tax and that they already have lost revenue to cuts in the states local government fund and elimination of the estate tax. Grossman and Henne are taking a measured approach, gathering input from cities and businesses before introducing legislation. Another smart move: enlisting the aid of former state Tax Commissioner Thomas M. Zaino, an expert in taxation. The discussion isnt focused on the idea of centralized collection of taxes. Thats another idea, backed last year by Tax Commissioner Joe Testa. But the idea of turning over collections to the state unnerves cities and villages even more than the idea of establishing uniform rules and definitions.

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6/16/12 4:19 PM

Worthwhile effort | The Columbus Dispatch

http://www.dispatch.com/content/stories/editorials/2012/06/04/wor...

2 of 2

6/16/12 4:19 PM