Bill reaffirming Ohio income tax law takes a step forward

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The ongoing issue of municipal income taxes and where Ohioans actually work continues to be a byproduct of the COVID-19 pandemic, and the Ohio House moved a step closer Wednesday to settling the matter.

The House Ways and Means Committee passed House Bill 157, which would solidify the state’s standing that cities only can tax people who live in that city or work in that city.

When the pandemic first struck, the General Assembly passed a law that allowed cities to continue to pull taxes from employees who worked from home while the state was under a stay-at-home order, even though that home would be in another community. That plan was designed to not pull significant amounts of taxpayers’ dollars from major cities.

Since then, Columbus-based think tank The Buckeye Institute became involved in five lawsuits challenging the law, winning a settlement in one while the others are awaiting resolutions or on appeal.

“House Bill 157 protects Ohio’s taxpayers by re-affirming the well-established conditional principle that a city can only tax people who live in that city or work in that city, and it further rectifies the unconstitutional overreach of House Bill 197 by recognizing that while the General Assembly can legislate rules regarding tax withholding, it cannot expand a city’s taxing jurisdiction to include people who do not live in or work in a city,” said Jay Carson, senior litigator at The Buckeye Institute.

House Democrats, however, believe HB 157 will create significant issues for cities.

“For a decade, Republicans gutted local government funding, forcing local communities to rely heavily on income taxes to fund the services essential to our daily lives, from police, fire and emergency services to parks and education,” said Rep. Lisa Sobecki, D-Toledo, ranking member on Ways and Means. “Now, Republicans are looking to pull the rug out from under communities again with this bill that will decimate local government resources at a time when they’re already stretched to think responding to this once in a century public health and economic crisis. HB 157 will force cities and townships alike to make some tough choices, This bill should not pass.”

The bill now awaits a vote on the House floor.





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