The October 10 Dispatch article about Ohio cities planning to sue the state over centralized income-tax collection struck me as unbalanced, with no quote from proponents of the plan.
At the Tax Foundation, we regard Ohio’s municipal-income-tax structure as the worst in all 50 states. Our State Business Tax Climate Index, a measure of a state’s tax structure, reflects this complexity and ranks Ohio’s tax system 45th in the country.
Within the last year, we have testified in Ohio about simplifying the tax code through centralized collection and blogged on the issue. We point to states like Maryland that rely heavily on local income taxes, but handle those taxes on just a few lines on their state income-tax return form. Pennsylvania taxes nonresidents based on their primary place of employment. This cuts down tremendously on paperwork.
Centralized collection would help Ohio to cut down on needless complexity in its tax code, while still providing revenue for localities.
Tax administration gets forgotten in the tax-policy debate, but it’s important to relieve the paperwork headache for both businesses and individual taxpayers.
The Tax Foundation