One of the questions I get asked most often about the tax reform issue back on the November ballot is a version of this: If the city is going to increase the income-tax credit given to those who work outside the city to 100 percent (from 83.3 percent), how can the city increase its revenue by the needed $8 million a year?
The answer is in the math. The primary source of income tax for the city (more than 70 percent) is employee withholdings. Less than one-fourth comes from resident tax returns.
There are approximately 13,454 people who work in Gahanna and live somewhere else. And we know that most of those workers live in areas that tax income at a higher rate.
For one example, Suzy works in Gahanna and lives in Columbus. She pays 1.5 percent to Gahanna, our current income-tax rate (since 1978). But Suzy lives in Columbus, which has a rate of 2.5 percent. So she not only pays Gahanna 1.5 percent, but she also must pay an additional 1 percent to Columbus. If Gahanna's rate were increased to 2.5 percent, Suzy would still just pay 2.5 percent, but that whole amount -- an additional 1 percent -- would stay in Gahanna. This is possible because Columbus offers a 100-percent credit for their residents who work in an outside municipality.
Now, as many argue, Suzy spends a lot of time in Gahanna because she works here. We are very glad she does. She uses our roads, our utilities and perhaps our trails and our parks while she is here. Our safety services serve her during her workday and while she commutes to and from.
Contrast that with the local tax situation of Tom. Tom lives in Gahanna but works in Columbus. Tom must pay Columbus 2.5 percent, and because Gahanna offers only an 83.3-percent credit currently, he also must pay Gahanna an additional one-fourth of 1 percent.Tom's total local tax bill is 2.75 percent, but only one-fourth of 1 percent stays in Gahanna.
In these two examples, one could make the argument that Gahanna is leaving the 1 percent that Suzy pays to Columbus "on the table" because Columbus and other cities that tax at a 2.5-percent rate collect their additional 1 percent anyway. And cities do not share their income-tax revenue among themselves in any way to create equity. In Ohio, income taxes primarily are collected in the city you work in, not the city of residence.
Without this tax reform, the current inequity in total local income-tax burden will continue for our residents. For example, since I live and work in Gahanna, my total local income-tax burden is 1.5 percent. But my next-door neighbor, who works in Columbus, has a total local income-tax burden of 2.75 percent, almost twice what I pay. I don't think that is fair. I am willing to pay the same as my neighbor to local government, and if the current tax-reform issue passes in November, I will pay 2.5, and so will my neighbor. I will pay 1 percent more, and he will pay 0.25 percent less. Considering I live and work here and use Gahanna roads, utilities and services intensively, is it fair that I pay half of what my neighbor pays?
Is this whole system fair? That is a question to take up with the folks at the Statehouse, in my opinion. I think perhaps Ohio workers should pay half of their tax where they work and half where they live, or some similar system. If this were adopted statewide, this would seem to be more equitable. Maybe then cities in Ohio would quit fighting each other for jobs. But the big cities often lead the way, and as their most favorable financial position is in collecting all of the tax for everyone who works in them, I don't see this system changing anytime soon. So Gahanna must play in the playing field in which we find ourselves, like it or not.
Not surprisingly, many of the people who oppose this issue are people like me, who live and work here and would see the biggest increase. If we worked almost anywhere else, we would pay more than we do today in income tax. Isn't our fair city, in which we are doubly invested, where we live and work, worth investing in at the same rate our neighbors that work elsewhere invest? I think the answer is yes, and that's one of the reasons why I will support the tax-reform issue on the Gahanna ballot Nov. 5.
Becky Stinchcomb is mayor of Gahanna.