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1 Scott Drenkard, Enhancing Simplicity in Ohio's Municipal Income Tax System 1 (2017)

handle is hein.taxfoundation/ensiohmtx0001 and id is 1 raw text is: Enhancing Simplicity in Ohio's Municipal Income Tax System Scott Drenkard Economist & Director of State Projects, Tax Foundation Ohio House Committee on Ways & Means March 7, 2017 Chairman Schaffer, Vice Chairman Scherer, Ranking Member Rogers, Members of the Committee, Thank you for the opportunity to speak with you today. My name is Scott Drenkard, and I'm an economist and the director of state projects at the Tax Foundation. For those unfamiliar with the Tax Foundation, we are a nonpartisan, nonprofit organization that has monitored fiscal policy at all levels of government since 1937. We have produced the Facts & Figures handbook since 1941, we calculate Tax Freedom Day each year, and have a wealth of data, rankings, and other information at our website, www.TaxFoundation.org. I'm pleased to have the opportunity to speak with you today with regard to House Bill 49, particularly elements of the budget bill related to simplifying the process of collection of Ohio's municipal net profits taxes. While we take no position on legislation, we hope to offer our insights and provide a national perspective on tax issues. Ohio's municipal income tax system is the most poorly structured local income tax in the United States Municipal income taxes are not necessarily unique to Ohio; however, the collection of local income taxes in Ohio is a serious headache compared to what is done in other states, particularly for businesses. In 2011, we wrote a paper on city- and county-level income taxes, and found that of the 17 states that rely on local income taxes, Ohio has among the highest rates. In 2010, local income tax collections as a percentage of state personal income were 1.06 percent. The only state with higher effective rates is Maryland. One feature of Ohio's local income tax system that differs from almost everywhere else is that businesses in this state must withhold income taxes in every jurisdiction that an employee works in. More than 600 cities and villages tax a business's net profits in the state as well.

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