Municipal income tax reform is on the agenda in the lame-duck session of the Ohio General Assembly.

The Buckeye Institute has published a report which highlights the most aggregious aspects of Ohio’s municipal income tax system and identifies needed reforms.Unknown-6

Buckeye puts the issue into perspective,

Forty other states manage to fund local government without imposing municipal income taxes, putting Ohioans and their businesses at an immediate economic disadvantage. State policymakers should be looking for ways to reform the state’s entire local tax system to make Ohio more competitive and inviting to businesses, entrepeneurs, and workers. Unfortunately, recent proposals, while offering much needed reform, barely address many of the fundamental problems with Ohio’s system.” (Emphasis added.)

Buckeye suggests the following reforms which should constitute the “bare minimum” of any legislative reform effort:

  • “Standardize reciprocal municipal income tax credits across jurisdictions for tax fairness;”
  • “Allow for an eventual 20-year Net Operating Loss Carryforward to facilitate start-up business formation;”
  • “Use a simple “bright-line” residency test that taxes non-residents based on their primary place of employment;”
  • “Set a higher threshold for filing a net profit return (which is currently set at $10) to avoid having taxpayers spending more to file than they owe in tax liability;”
  • “Require a simple form for businesses to declare that they conducted no business in a specific municipality and therefore did not need to file a complete tax return for that municipality;”
  • “Include a ‘Taxpayer Bill of Rights.'”

Read Buckeye Institute’s report, “More Must be Done for Real Municipal Income Tax Reform,” HERE.