Columbus Dispatch Editorial...
Worth studying
Open mind needed on effort to simplify income-tax compliance 

Ohio has a lot of government — too much of it, in the view of many. A multiplicity of cities, villages, townships and school districts can lead to inefficiency in delivering public services and confusion for those who have dealings with more than one jurisdiction. 

For businesses considering where to locate or whether to expand, the prospect of having to comply with numerous and different local income-tax schemes can be daunting. 

For that reason alone, Ohio Tax Commissioner Joe Testa’s idea — that the state might be able to ease the burden on businesses with centralized collection of municipal income taxes — is worth exploring. It should be noted, the idea doesn’t originate with Testa. Business groups, including the Ohio Chamber of Commerce, public-accounting organizations and others have been asking the office for years to consider making it less complicated to pay local income taxes in Ohio. 

Not surprisingly, though, Testa’s trial balloon is weathering potshots from municipal officials, who don’t like the idea of their primary revenue source being taken, even temporarily, out of their hands. “On the surface, it looks like the state is grabbing our money,” said Diane Miller-Dawson, finance director for the city of Akron. 

Others are convinced that their local collections are more efficient and accurate than any large, statewide effort could be, and they fear that state officials could take away their control over tax factors, such as rates and what is included in the tax base. 

Testa can best defuse this skepticism and fear by making the study of the issue transparent and open to participation. If municipal officials know what’s being considered and have a chance to weigh in on it, with a study committee and by educating the public, they’ll be more willing to consider change. 

In addition, their input and that of the public could improve the process by pointing out problems and opportunities that might escape a study group. 

While Testa hasn’t offered many details on how such a system might work, saying his idea is only preliminary, the potential for improvement is obvious. Ohio has more than 500 local taxing entities, with different rates and different rules about what is taxable. Businesses with a presence in multiple jurisdictions can spend a lot of money and time just paying income taxes accurately. 

Some speculate that centralized collection actually could mean more money in city treasuries, if the state charged less for the service than the cities’ current cost of maintaining income-tax departments. A statewide system also might usher in mandatory filing for city income taxes, which would increase collections. 

There also is some precedent. The tax commissioner’s office already processes payments for the 181 Ohio school districts that levy an income tax, as well as county-level sales taxes that piggyback onto the state sales tax. 

Ultimately, though, it is the urgent need to attract businesses and jobs that makes an idea such as simplified tax compliance worth exploring. And if Testa should find that the idea is unworkable or impractical, that knowledge also will be valuable. 

Read it at the Columbus Dispatch