Powell income tax: Council mulls rate hike to 2%, but with 100% credit
The city of Powell is taking steps toward a restructuring of its income tax.
City Council is considering placing an issue on the May 4 ballot that would raise the city’s income-tax rate from 0.75% to 2.0% and increase the credit for taxes paid in another municipality from 25% to 100%.
Council is expected to hold a second reading of the proposed ordinance Jan. 19. If approved, the city then would have to certify ballot language to the Delaware County Board of Elections by Feb. 3 to be placed before voters in May.
“The income tax has remained unchanged at 0.75% for three decades, during a period where the city has grown rapidly,” City Manager Andrew White said. "Powell has one of the lowest effective tax rates in the state of Ohio.
Out of 28 comparable cities, Powell’s current income-tax credit ranks 21st, he said.
White said the restructured tax would generate an additional $3.4 million annually, with about 80% of the increased revenue coming from residents who work in Powell but live elsewhere.
The tax would begin collection Jan. 1, 2022, should voters approve the measure.
The additional revenue would bolster the city’s ability to maintain and improve infrastructure, provide safety and other services and enhance the city’s competitiveness regarding economic development in the region, White said.
White said council has been discussing the income-tax issue for about a decade, including a measure -- defeated by voters -- in 2018 that would have increased the rate to 1.15% and the credit to 50%.
White told council at its Jan. 5 meeting that much of the language in the current proposed issue is taken from feedback after that defeat, saying the tax credit was “too low,” according to many residents.
“The 100% credit is important to do for our residents,” council member Melissa Riggins said, adding that some individual city residents might actually see an overall reduction in the amount of income tax they pay.
The current credit means residents pay 0.5% to the city of Powell plus an additional tax to the city where they work. With the proposed changes, residents would pay taxes to Powell only if they are taxed below 2% in the city in which they work.
“The city sees this as an opportunity to restructure the current tax distribution among the residents with an increased credit of 100% for those that live in the city and work in a different municipality,” Mayor Frank Bertone said. “Many residents feel the current tax burden is too high when you factor the taxes residents pay to other municipalities and the city of Powell.”
Additionally, the proposal would increase the effective income-tax rate for individuals working in the city from the current rate of 0.75% to 2%.
“What this proposal does is wean us away from income-tax revenue from Powell residents to tax from residents of other communities who work in Powell,” council member Tom Counts said.
He said the balance between resident and nonresident income tax was not an issue when the current income tax was instituted because “there weren’t any businesses in Powell.”