Cities Must Go Where the Money Is

Submitted by Roldo on April 14, 2008 - 5:39pm.

You can blame past, present (and future) state representatives for the cutbacks in city budgets. They refuse to go where the money is to find needed tax revenue.
If state law were fair at all, it would allow local communities to tax all sources of income fairly, not primarily the worker’s weekly paycheck.
Ohio doesn’t allow local governments to go after tax revenue where it is. That is to tax people who have the money. Neither do I see local politicians getting exercised by the inequality.
Often low income wage earners who don’t have to pay a penny in federal taxes still have to shell out money they need for their families to pay local income, or payroll, taxes.

Such taxes are unfair, since there are no deductions, as there are with federal taxes, and doubly unfair when you work in a different community than you live. You get taxed, usually with some rebate, in both communities.

Our ancestors would be tossing tea in Lake Erie, or a politician or two.
Cleveland Heights voters in March turned down a small increase in the city income tax. In my opinion, the voters should have.
The Plain Dealer this a.m. spread across its front page a “Cities in Crisis” piece noting that “’Burbs Making Serious Cuts to City Budgets” for various reasons.
http://blog.cleveland.com/metro/2008/04/suburbs_making_serious_cuts_to.html
Yes, it’s a big problem.
Then why don’t the politicians and the newspaper see a very simple and obvious answer – tax all income, not just paychecks.
If you read the Sunday business pages of the PD you’d know exactly where cities should go to make up revenue shortfalls. Go to those who have it, Don't keep going to those who don’t.
The paper listed the earnings of a few Cleveland area residents on the sales of stock with net gains totaling more than $2.2-million in income.
City taxes on this income: Zero.


But the taxpayer who earns $7 an hour has to pay a city tax usually at least 2 percent, sometimes 3 percent or more.

Why should a low income earner have to pay more than a rich stockholder on their income?
Only because the political system refuses to tax all income at the same level, giving stockowners, for example, a free ride.
The Plain Dealer runs a neat column telling us what top corporate honchos are pulling in from salaries and other sources. It’s called “What the Boss Makes.”
Last Saturday, the Boss examined was Chairman and Chief Executive Officer Edward Crawford of Park-Ohio Holding Corp., of Mayfield Heights.
Crawford earns a base salary of $750,000. He has to pay city income tax on that amount - only 1 percent in Mayfield Heights.
However, Crawford’s income is supplemented by “non-equity incentives,” which they don’t pay clerks at Wal-Mart’s or other working places, of $1,246,920. That’s tax free from Mayfield Heights, as it would be in Cleveland, Cleveland Heights, Parma or anywhere in Ohio.
Then Crawford gets stock awards of $812,583. No city tax on that either.
Then Crawford gets stock option valued at $69, 583. No city tax on that either.
Then he gets $81,446 in life insurance payments, his 401(k), car expenses and club dues. You guessed. No city income tax on that either.
On his total income of $2.9 million, Crawford pays city income taxes on only about one-quarter of his annual earnings. The worker who earns $300 a week pays on 100 percent of his or her income.
Now I don’t mean to pick on Crawford, who helped build a billion dollar business.
However, it does seem a bit unfair that he has income resources that don’t get taxed at all locally while a low income worker gets taxed on the first dollar he makes. And the last one, too.
 
Cities should stop looking at the same worker to produce revenue when there are plenty of other sources.
Go where the money is – that’s a simple and reasonable solution.

Roldo's blog | 386 reads
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Blood from a stone
Submitted by lmcshane on April 15, 2008 - 9:50am.

Thank you Roldo--working with children, I am always amazed that fairy tales and proverbs have more reasonance today than ever.  I see giants crushing everything in this town, while little people scurry around to make way for them.   Colossal stupidity.

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what a smart idea!
Submitted by Susan Miller on April 15, 2008 - 1:35pm.

Roldo,

Why is it do you think that simple ideas like this one somehow don't make it into the civic space where politicians rule? And I say rule as a comment on Hagan's continued banter about "representative democracy", which feels more like a feudal sort of deal to me personally.

But seriously, I wish to reiterate what I have said before, we need to "network map" a la Valdis Krebs, our local political machine - City of Cleveland and the beaucoup bergs that surround it, Cuyahoga County, Port Authority and Columbus. This I believe would uncover some pretty shady business. The only reason I can see for not taxing people on "some income" can only be based on some back-slapping, in-guy sort of dealing that helps get the politicians elected. Probably it is more complex than my little mind can comprehend; afterall I am just a citizen, taxpayer who should not try to understand. I should just bend over and let democracy have its way, right? Just shut up and pay, right? Could this be any more complex than it already is? This stuff is mindboggling!

I have posed this question here before: Do we have a city ethics commission? Do we have one for the county, the state?

Please outline more of the Roldo tax reform package here. Clearly you have a long and informed view - one that many of us could benefit from learning more about.

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Susan: No, there's no magic
Submitted by Roldo on April 15, 2008 - 2:52pm.

Susan: No, there's no magic or even experience that lets you know that laws are not made to benefit most.

I guess one thing I would say is to vote against - a kind of liberal no-no - any attempt to increase city income taxes. Unless the taxes are extended to other forms of income - meaning income that isn't derived  from a payroll AND that if you are going to continue to  tax income on a local basis that it follow the tradition (though even it isn't totally fair) of progressivity. In other words, people who make so little as to put them in or near the poverty level shouldn't have to pay ANY tax. They are already regressively taxed by sales taxes and all kinds of fees.

Our elected officials fail us constantly by not, as I tried to say on this Tax Day, by taxing the little guy  or getting him/her on fees, parking, traffic tickets, out-of-line court charges and fees of any kind they can  think to invent.

On identifying those who make decisions and exposing them for their activities, as I wrote before, it's a matter of making a list of those people - government, corporate, foundation, charities, other non-profits - and then forming a list of institutions and charting it. It will show how interrelated (incestuous) they are. And how their community of interests becomes apparent.

Sometimes this reveals itself more than at other times. I'm convinced that crisises can help make such an effort easier to  track. That's because when there is a crisis the shadow government and its people have to show themselves more.

I'm not talking conspiracy. It's more as Murray Kempton once  wrote, "Habit conditions more deplorable scenes than conspiracy could ever contrive." I think I  have that right. It's been the habit of certain interests and people to control what happens and what doesn't happen.

I hope this makes sense to someone.

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