Power of the purse
9/17/2011GOV. John Kasich wants the state to take over income tax collection for Ohio municipalities. Recent history suggests local officials should be wary of help offered by the governor's office.
Lt. Gov. Mary Taylor and state Tax Commissioner Joe Testa propose centralizing municipal income tax collection, supposedly in the interest of greater economy and efficiency. But the beneficiaries would not be local governments. Instead, the purpose is to relieve businesses of the apparently overwhelming burden of figuring out how to pay taxes whose rates vary from city to city and town to town.
These often are the same businesses that employ armies of accountants to figure out how to avoid paying taxes at all. It is difficult to credit the argument that they pull out their hair over variations in local tax codes.
The push to centralize income tax collection originated not in the halls of local governments, but in the business community. The Ohio Chamber of Commerce has sought such a change for years.
But centralized collection of income taxes would not do much to ease the burden on businesses unless it included standardized tax rates. And one tax rate likely would mean less revenue for some, perhaps many, communities.
That shouldn't come as a surprise. This is the administration that eliminated the state estate tax, reneged on a commitment to local governments to replace revenue lost to property tax reductions, and cut the Local Government Fund in half in the current budget. It has proven that it cannot be trusted blindly with sources of local revenue.
The state already collects income taxes that go to school districts -- some $347 million last fiscal year. In the process, it charged the districts an administrative fee of more than $5 million. It's reasonable to assume that the state would charge cities, towns, and villages as well for the privilege of losing control over their primary source of revenue.
Transferring power over local government purses to the state also would weaken home rule, which already is under assault from Columbus.
In Mr. Kasich's now-familiar bus analogy, anyone who doesn't get on board with whatever he and Republicans in the General Assembly want will be run over. But the governor may have understated the real consequences of disagreement.
It appears now that the uncooperative will be run over not once, but again and again. And the bus does more than move at the speed of business. It appears that business is in the driver's seat.