Moody: Phase out Toledo income tax

9/12/2009

Republican mayoral candidate Jim Moody laid out a plan yesterday to phase out Toledo's 2.25-percent income tax on city residents over the next four years.

He said the tax causes people to flee the city and discourages new businesses from operating here, and that the city's tax sources should be spread more broadly. He added that fewer than half of Toledo residents pay the tax, which is levied only on paychecks and business profits.

Mr. Moody said he would commit to eliminating the 0.75-percent "temporary" income tax by 2011, and the entire income tax by 2013.

The tax is expected to generate $145 million this year for the city, the largest revenue source in Toledo's $225 million general fund, which pays for services such as police and fire protection, trash collection, and parks and recreation.

Mr. Moody said he would replace it with a combination of higher property taxes, a "consumption" tax, and higher hotel taxes. He proposed an extra 0.5 percent to 1 percent sales tax, which would be collected by the county and transferred to the city, and a 1-cent-per-gallon gasoline tax.

The mayoral candidate said he didn't know how much real estate taxes would have to be raised to replace the remaining loss of revenue from abolishing the city income tax.

He did say that he would exempt senior citizens from higher taxes in his plan.

Mr. Moody said he would leave the 2.25-percent tax in place for people who live outside Toledo and commute to jobs in Toledo.

"This proposal is not a new tax. It is revenue-neutral," Mr. Moody said.

Megan Robson, spokesman for Mayor Carty Finkbeiner, yesterday said the sales tax is not controlled by the city. State law allows the county to control that.

Additionally, a property tax increase would require a vote of the people and the gas tax is state-regulated, Mrs. Robson said.

Mr. Moody has said he would enlist the help of state elected officials to adjust the gasoline tax and county officials to adjust the hotel-motel and sales taxes.

Mr. Moody is one of six people on Tuesday's mayoral primary ballot, along with Democrats Keith Wilkowski and Ben Konop and Independents D. Michael Collins, Mike Bell, and Opal Covey. The top two vote-getters will face off on Nov. 3.

Mr. Collins said Mr. Moody's proposal has "zero potential," because of the many hurdles it would have to overcome.

He predicted the state would be unsympathetic to raising gasoline taxes for a municipality, and the county would be unlikely to share the sales tax or the hotel-motel tax with Toledo.

He estimated it would require an increase equal to $1,100 annually on each $100,000 home to raise enough property taxes to replace the income tax - likely a tough sell at the voting booth.

Mr. Wilkowski said he thinks no taxes should be raised: "Our goal should be to keep the cost of government down rather than focusing on the source of the taxes."

Mr. Konop said Mr. Moody's tax plan doesn't make sense and would be bad for Toledo and its residents.

"To eliminate income tax at a time when we're in a severe budget crisis I would say is irresponsible," said Mr. Konop. "He's trying to shift all these taxes to far more regressive taxes. It hurts people on lower incomes, fixed incomes, and seniors, even if there's a senior citizen exemption for the property tax."

Mr. Bell declined to comment.