Columbus, Ohio's Income Tax (Part 1)

The disconnection between public treasuries and local domestic needs drawing upon them does not exist within taxpayers’ pockets or bank accounts. The same taxpayers supply money for all layers of government. Rather, the disconnection is purely administrative and governmental. “Dumbed-down taxes,” Dark Age Ahead (p105)

Maybe this title will be a better search term than “Subsidiarity” was. I’m sure plenty of my fellow Columbusites will turn to google to help decide how they should vote for the income tax increase.

On Monday, I didn’t indicate what my vote would be, but I did note that the tax is at least, in Jacobs’ view, responsive to ability to pay and economic growth. The problem is that our income tax is a commuter tax. If you work in Columbus, but live in one of the suburbs, you still pay the two percent tax (or, more likely, you have it withheld like your other payroll taxes).

The problem: there is a land-tax dynamic in the behavior of local governmental spending.

Researchers Ann Bowman and Michael Pagano explore this dynamic in a chapter of Terra Incognita: Vacant Land and Urban Strategies, and even discuss Columbus specifically.

As I look at the literature surrounding the income tax increase, the choice I’m looking at is between a higher tax or a decrease in city services. It’s not so simple. A good portion of those paying Columbus’ income taxes opt out of many of the services Columbus provides by living elsewhere. Bowman and Pagano’s numbers have a 2000 income tax receipt of $318 million. In 1999, the estimate they were provided of non-resident commuters paying Columbus income taxes totaled receipts of $140 million. If you’ll allow me to fudge between years, that’s 44 percent coming off the payroll of non-residents who won’t be voting for (or against) this tax.

It would be different if property taxes mattered much to the city government, as I’ll try and show as I continue this post tomorrow.