November 8, 2012

City of Mason, OH takes taxation without representation to a new level

Filed under: Economy,Ohio Economy,Ohio Politics,Taxes & Government — Tom @ 6:30 pm

Singling out nonresidents and renters.

This post went up earlier today at

Ohio’s quirky tax system already affords its cities, villages and school districts far too much leeway to tax nonresidents without their consent. Mason, Warren County’s largest city, has just shown them how to double down on that idea while also inventing a new target: resident renters.

According to the Tax Foundation, Ohio municipalities first began levying income taxes in 1946. School districts gained that ability under Democratic Governor Dick Celeste in 1989. As of 2011, the foundation says that “593 of Ohio’s 932 municipalities and 181 of Ohio’s 611 school districts impose an income tax.” According to’s Tonya Moreno, “Ohio local income tax rates range from 0.40 percent in Indian Hill to 3 percent in Parma Heights.” Separate school district income tax rates range from 0.25 percent to 2.0 percent.

These taxes are especially pernicious because the tax jurisdictions involved levy them on both residents and nonresidents by primarily taxing gross earnings from employment. A majority of workers who pay these income taxes don’t live in the cities or school districts where they work. Many if not most of them only occasionally visit the jurisdictions which tax them during non-working hours. Nevertheless, they underwrite a large percentage of the cost of operating somebody else’s government and public schools without ever having had a chance to vote on whether or not such a tax was a good idea, and without any input as to how these entities operate.  This is the very kind of “taxation without representation” over which the American Revolution was fought.

It gets worse. If you live and work in jurisdictions which both have income taxes, the jurisdiction where you work, not the one where you live, gets to keep the money. Hordes of suburbanites subsidize the operating costs of Ohio’s larger cities, all of which have rates of 2 percent or higher, to the tune of hundreds of millions of dollars a year (despite this, most of them are in serious financial trouble), while the towns where they live and more fully benefit from police, fire and other municipal services receive nothing. To partially address this problem, some suburbs have made part of all of their lower-rate income taxes “non-reciprocal,” forcing their residents to pay both where they live and where they work.

The City of Mason has grown at a breakneck pace during the past several decades. Despite being an ostensibly conservative and Republican enclave, so has its appetite for taxes, particularly those it can levy on non-voters. Its income tax rate is a relatively modest 1 percent, but thanks to the presence of dozens of large employers within its original boundaries as well as others acquired though annexation, the tax has turned into a gravy train.

Faced with the withdrawal of $700,000 in State of Ohio fire and emergency medical services funding — a tiny amount, given the city’s total budget of $40 million, which is a stunning $1,300 per resident — City Council, fresh off a years-long municipal building spree, knew it couldn’t go to voters, particularly homeowners already punished by high property taxes, to make part of its income tax non-reciprocal. Instead, using some of the most outrageous language I’ve ever seen on a ballot referendum, it asked them if they would be glad to push most of the financial responsibility for making up the shortfall onto nonresidents and renters.

Effective January 1, 2013, under Charter Amendment 7, which easily passed on Tuesday with a 73 percent majority, nonresident workers and renters will see their income tax rate go up to 1.2 percent. Additionally, the amendment gives Council the ability to increase that rate to 1.5 percent in future years without voter approval. Nonresident workers who are already paying for services they seldom if ever use will be paying a higher income tax rate than the city’s homeowners. Those who rent will will also receive disparate and unfair treatment, as their landlords already pay city income tax on their net rental income.

One can expect other Buckeye State tax jurisdictions to consider imitating what Mason has done, thereby in the long run making the state a far less attractive place to build or expand a business and create jobs. There’s hardly anything easier than getting voters to approve forcing people who have no say in the matter to financially support them.



  1. Down here, Washington DC has been considering levying such a tax on nonresidents in VA and MD who work there but they are stopped by the prospect of MD and VA levying their own taxes. Basically, this is an arms race that DC does not want to start. Lucky for me I live in MD and work in VA but my wife works in DC so such a tax would affect us. Given that MD and DC are both liberal paradises and VA is moderate but leaning left, and I am convinced it will happen sooner or later.


    Comment by deskbox — November 8, 2012 @ 8:35 pm

  2. #1, I would agree it’s coming, because IIRC Maryland is in more trouble that people realize.

    Comment by Tom — November 8, 2012 @ 11:14 pm

  3. [...] City of Mason, OH takes taxation without representation to a new level [...]

    Pingback by City of Mason, OH takes taxation without representation to a new level | PERSUASION IN INK — November 9, 2012 @ 1:11 pm

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