The Ohio Chamber of Commerce is looking for more municipal tax uniformity and Dan Navin, assistant vice president of tax and economic policy, made a stop in Upper Sandusky on Tuesday to discuss the attempted changes, but was met with plenty of questions.
Present at the meeting were tax representatives from Upper Sandusky, Tiffin and Bucyrus, along with members of the Upper Sandusky Area Chamber of Commerce.
“Really what we’re trying to say is, ‘It’s too difficult for businesses to keep track of what’s going on in 600 different municipalities across the state,’” Navin said. “We need a uniform system for tax structure that applies to all municipalities and businesses to lighten the administrative burden on timekeeping.”
He said the Ohio chamber hopes to have a bill to the state House of Representatives and Senate by this fall to have Gov. John Kasich finalize it by the end of the year. If it is not passed by then, Navin said he thinks it will be passed by next June.
“I think there is broad agreement on the objective from both the businesses and municipalities,” Navin said. “The problem is working through each of the issues. … One municipality may look at an issue and say it may cost them more tax. … The intent of this is to have it be revenue neutral overall.”
While he said he believes the bill will pass, Navin said there are three main points that are holding up the bill.
“The first is the occasional entry rule, where an individual who works in a city for more than 12 days, the company has to withhold tax from the income earned by that employee while he or she was in that city,” he said. “We think that threshold should be more like 30 days. Twelve days really isn’t that much time.
“Number two is businesses being able to deduct net operating losses from prior years,” he added. “If you incurred a loss, you lost money. If you make money the next year, you still want to be able to deduct some of that loss against your tax liability for the current year. Different cities have different requirements. The third issue is with pass-through entities, talking proprietorships, partnerships, S-corporations and limited liability companies, where the profits flow through to the individual owner, shareholders or investors. The question is whether you tax the (generic) partnership as an entity or do you try to tax each individual partner for their individual share of profits.”
After sharing information about the bill, Bucyrus City Auditor and Tax Administrator Joyce Schifler questioned whether these issues were the same as in House Bill 95, which went into effect in 2003.
“It was discussed,” Navin said. “We have to make some sort of decision now. … The biggest decision that came out of (HB 95) was the Medicare wage base, which simplified things. It made it easier for businesses to file withholding obligations.”
Also representing Bucyrus was city Council President Sis Love, who brought one of the biggest arguments against the current bill.
“You say this has no impact, no connection whatsoever with the state collection of municipal income tax?,” Love asked. “That’s like separating bread and butter. They go hand-in-hand. You cannot say you’re only concerned with this one thing. I’ve sat in meetings with Gov. Kasich and heard him say he was not interested in collecting Ohio municipal income tax. The next day in the newspaper from his (Ohio) commissioner, there’s an article of him saying that’s the only way to go is to collect municipal tax at the statewide level.”
Navin responded to the question by saying the Ohio chamber has no intention of a statewide collection.
“Ohio Commissioner (Joe) Testa is not pushing for statewide collection,” Navin said. “They are not part of the discussions that are on-going. I don’t know how many other ways I can say, ‘We’re not talking statewide collection,’ and that’s the truth. … I’m talking about the specific context of this negotiation of a uniform tax form bill. Sure, people may talk about things, but what I’m saying is that the Ohio Chamber’s involvement, (certified public accountant’s) involvement, the (Ohio) House (of Representatives)’ involvement, have the intent of drafting a bill and agree that statewide collection of municipal tax is not going to be part of that legislation.”
While the collection would take place for the entire state, Upper Sandusky Chamber President Kate Orians wanted to know what the benefit is for individual small municipalities.
“I understand the benefit to businesses of uniform tax reform, that’s obvious, but what’s the benefit to us?,” Orians asked. “What’s the benefit to Upper Sandusky, Wyandot County and all of the people from small villages? What’s our benefit in being forced to paying more taxes? Because it’s going to cost money to do this uniformity.”
Navin said it would cost money to implement the change.
“This gets at the overall result of the effort,” he said. “In that instance, it may cost (Upper Sandusky) money, but there may be another issue, whereby you may get an issue where you may get a better tax benefit like taxing non-corporate business or net operating losses. … It’s going to cost my business people some money, too.”
Also attending the meeting were Tiffin Finance Director Gwinn Rinnhart and Titles and Tax Commissioner Linda Meeley, while the city of Upper Sandusky was represented by Income Tax Commissioner Rae Wessler. Representing the Upper Sandusky chamber were members Sarah Johnson, Dave Barnes, Mary Fox and Executive Director Kathy Tolle.
By PATRICK MASSARA