Ohio Tax Commissioner’s response to mayor’s recent column

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To the editor:

I write to share with your readers the other side of the story relayed in a recent column about the city of Sidney opposing Governor Kasich’s proposal to reform the municipal income tax on business.

If you do business in Ohio, there is a big problem with the local government system for taxing business income. It’s the obligation to file tax returns in every municipality where income is earned.

More than 600 municipalities across Ohio, cities and villages, tax businesses profits. Each of those municipalities can have different tax rates, rules, and filing requirements. It is the most convoluted local tax system in the country and a compliance nightmare for business taxpayers.

Some of us may complain about having to file one municipal (or state or federal) income tax return. Imagine if you had to file a return not just where you live, but in fifty, or maybe a couple hundred cities, all with their own rules and regulations.

That’s the costly burden business owners face in Ohio and the reason why the Governor is proposing to centralize the filing and collection of the municipal net profits tax.

Businesses would file just one form in one place and be subject to one consistent set of rules. The Ohio Department of Taxation would process the tax returns and send all the payments plus interest to the municipalities, minus a 1 percent administration fee.

Municipalities too would benefit saving more than $9 million a year in lower expenses while retaining control of tax rates, tax credits, and continue collecting more than 85 percent of total municipal income tax revenues.

This is a “pro-business” proposal that will cut unnecessary costs for businesses and make them stronger in every city in Ohio. That’s why most major business groups in Ohio are supporting the proposal.

There is no valid reason for municipalities to cling to an obsolete and counterproductive tax system. Ohio must continue improving its economic environment to compete for new businesses and jobs. The current municipal net profits tax system is a drag on those efforts to move Ohio forward.

Joe Testa, Ohio Tax Commissioner

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