The History behind the Proposal Westerville s income tax
Shared by: knowledgegod
The History behind the Proposal Westerville’s income tax revenues account for nearly 60% of the City’s revenue stream, but according to our City leaders and the Finance Director the current income tax structure does not provide enough revenues to maintain our infrastructure and to provide the level of city services that Westerville residents have come to expect. For example, we know an extra $4 million annual investment is necessary just to update all of the City’s roads currently rated as’ poor or fair’ to a fair or good condition. This additional investment is not possible today because the City’s 1.0% income tax rate for general services has not increased for 25 years, since 1983. (In 1998, voters approved “PROS 2000,” an additional 0.25% income tax devoted specifically for recreation and parks needs. ) And, under the current City of Westerville income tax structure, every resident does not pay the same rate of income tax. How the Proposed Tax Increase Would Work Westerville Residents who are retired or who are on fixed incomes would not be impacted at all financially by this plan. If approved, all Social Security, company pensions, dividends & interest income would continue to be exempt from the City’s income tax. Westerville residents who work outside Westerville (approximately two out of every three working residents are in this category) and who currently pay an effective income tax rate of 2.3% would see a net tax rate decrease. Here’s why: A Westerville resident who works in Columbus or a community with a 2.0% income tax rate must pay that community 2.0%--of which Westerville receives nothing- and then pay Westerville an additional 0.30%. So, their total current effective income tax rate is 2.3%, one of the highest in central Ohio. Under the proposed plan to change Westerville’s income tax rate to 2.0%, Westerville residents who work elsewhere would receive a full 100% credit on the taxes paid to the communities where they work. So they would see a net tax rate decrease from 2.30% to 2.0%, saving $3.00 annually for every $1,000 earned. Westerville residents who work in Westerville (approximately one out of every three working residents is in this category) currently pay 1.25%, which is our City’s current income tax rate. Under the proposed plan, these residents would pay the same 2.0% rate as Westerville residents who work outside Westerville (in a 2% taxing district), which would mean an additional $7.50 per $1,000 earned income. Non-Westerville residents who work here now pay 1.25%, our City’s current income tax rate. Most also pay 0.75% to their home community for a total of 2.0% paid in local income taxes because the predominant central Ohio rate is 2.0%. With this proposal, these non- residents would not be impacted, and would continue to pay 2.0%. But their full 2.0% would stay here, resulting in an additional $8 million for Westerville services and infrastructure projects (these funds are now being used by other communities to pay for projects outside of Westerville). To calculate how the proposed income tax restructuring would impact your household: residents working outside of Westerville in a city with a 2.0% income tax rate (i.e., Columbus, Dublin, Worthington, New Albany, etc.) would save $3.00 annually for every $1,000 earned; residents who work in Westerville would pay an additional $7.50 per $1,000 earned. The Westerville Area Chamber of Commerce Board of Trustees and Government Relations Committee are currently reviewing this issue for consideration to take a position.