Thursday, December 13, 2012

Cincinnati Budget Punishes Workers While Ignoring Reality

Special Guest Column by Amy Murray

Cincinnati’s proposed budget has generated a great deal of heat, particularly the proposal to privatize street parking meters – which from experience in other cities will mean higher costs and aggressive ticketing enforcement by a private company seeking maximum revenue. This move will make downtown and neighborhood business districts less desirable and drive away customers and visitors.

What seems to have been lost in the shuffle is the proposal to eliminate the municipal income tax reciprocity credit.  This credit allows Cincinnati residents to work outside the city without being hit by double municipal taxation. 

For example, my neighbor across the street works in Blue Ash.  Currently, she pays 2.1% in municipal income taxes: 1.5% to Blue Ash, and .6% to Cincinnati.  Under the Proposed Budget, my neighbor will pay 3.6% in municipal taxes: 1.5% to Blue Ash and 2.1% to Cincinnati.  That’s an increase of 71%! It’s even worse for my neighbor who works in Norwood.  She will be paying 4.1% in municipal income taxes!  That’s a 95% tax increase! This tax increase is expected to generate $6.5 Million from 15,000 Cincinnatians.  That’s over $430 per person in 2013.  Do you know anyone with an extra $430 in their pocket?  I sure don’t.

Of course, this new tax arrangement won’t work in reverse.  Live in Blue Ash and work in Cincinnati?  You currently pay a maximum of 2.1% municipal income tax rate.  If Cincinnati ends its reciprocity agreement, you’ll still pay a maximum 2.1% tax.  The City Manager’s budget plan only works to punish Cincinnati residents who find work outside the city limits. I guess they want to stop encouraging people to live in the City.

Does anyone believe that increasing taxes won’t harm efforts to attract and retain businesses in Cincinnati and surrounding communities?  Increasing taxes will only lead to a greater exodus of working families from Cincinnati. Simply put, eliminating the municipal income tax reciprocity credit is not the solution to Cincinnati’s budget woes – it will only make it worse through the loss of residents who work outside the city taking their tax dollars with them.

But there is more. This budget is being balanced on the back of the residents and businesses of Cincinnati including all these cost increases to work and/or live in the city
  • Increasing rates for all city parking meters and garages
  •  Raising property taxes to the maximum level allowed by law
  • Eliminate reciprocity between jurisdictions on the earning tax
  • Eliminating trash collection for all commercial properties
And even with all of these higher taxes, the City’s budget will still, yet again, be structurally unbalanced. The City continues to spend each year more than it takes in. This has caught the attention of S&P who has attached a negative outlook to its debt rating for the city of Cincinnati.

I encourage you to write to your City Council members and remind them that it is a tough economic time for everyone and the City should limit their spending and balance the budget without causing a greater burden to the families and businesses in the city!


  1. Actually this encourages people to work outside city limits. A person who lives in Cincinnati and works outside the city pays .6% and a person that lives and works in Cincinnati pays 2.1%. That person who pays .6% can vote and complain about their "high" taxes can complain just as much as the person who pays 2.1%. I pay more than the person for their kids to go to public schools and receive trash pick-up. Try living in San Fran or NYC... way higher taxes than you talk about.

  2. Robert, you are incorrect. Cincinnati charges a 2.1% earnings tax to anyone who lives and/or works in the city. They give residents credit for taxes paid to other local jurisdictions, but this is a matter of policy, not law.

    A person who lives and works in Cincinnati does indeed pay 2.1%. A person who lives in Cincinnati and works in a nearby city pays the other city 0.6%, and then pays Cincinnati 1.5% (2.1-0.6). See here for verification:

    Cincinnati has about 290,000 residents, but collects the 2.1% from around 380,000 people. You'd think with all that 'taxation without representation' they'd have enough. But no, their thirst for boondoggles exceeds their over-brimming trough.


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