Mon December 10, 2012
Cincinnati Council could end tax reciprocity
Cincinnati residents who work outside the city limits could soon lose their income tax reciprocity.
City Council could vote this week to approve the Manager's recommendation the credit be eliminated next year.
Ohio local income tax is assessed primarily to the municipality where it's earned and secondarily to where an individual lives.
Cincinnati has always allowed residents who work outside the city to reduce their city income tax by the amount they pay to other municipalities.
City Manager Milton Dohoney said the proposal is not ideal.
“You know it’s not something you’d say the stance we’re taking on tax reciprocity is something to really be jumping up and down about,” Dohoney said. “But the reality of where we are forced us to go to it.”
Council Member Chris Seelbach said the plan would send the wrong message.
“Of all of the ways to balance the budget, how does this help us going forward,” Seelbach said. “Because it’s going to penalize people who choose to live or stay in Cincinnati if they have a job outside of Cincinnati.”
Cincinnati officials estimate the change will impact about 15,000 residents.
They also said it will generate $6.5 million in additional revenue and nearly $5 million of that will go to the struggling general fund.
If Council were to decide not to eliminate tax reciprocity, then it would have to find additional revenue or cuts to make up for the difference since the manager figured it into his proposed 2013 budget.