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How municipal income taxes work in real life
December 30, 2008
This comment to our post on the proposal to allow Iowa municipalities to have their own income taxes is too good to be allowed to languish in the archives. "Gordon Gekko" writes:
As a tax practitioner in Ohio, let me tell you. City taxes are a nightmare.In SW Ohio alone, we have 80+ taxing districts. Each with different filing rules; some tax stock option income, others do not; some allow NOL carryforwards, some do not; etc.
In addition, assume you are a contractor. You are required to withhold income taxes for each municipality you operate in. You are also required to file a city income tax return in each of those municipalities.
Once, I did a return for a foreman on a road crew. He needed 60 copies of his W-2 in order to record all of the city withholdings
I can only hope Iowa takes this on so that you folks will be just as business friendly as Ohio, "The Heart of it All".
That would be a small price to pay to enable Iowa to dodge the issues of local government reform, school district reorganization, and a punitive commercial property tax environment.
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Comments
I had to do an Ohio tax return for my brother one year. Gratis, of course. At least I now know to estimate high if I ever have to do another.
Posted by: Amanda | December 31, 2008 11:25 AM
Something, I forgot to mention in my earlier comments.
Because of property taxes becoming so high many school districts have imposed a school district income tax in lieu of higher property taxes.
I had to explain to a guy who moved here from New York how he had to pay Cincinnati income tax because he worked there; Wyoming income tax because he lived in the city of Wyoming (this city allows no credit for Cincinnati tax); and Wyoming school District tax because he lived in the S/D.
I believe his comments were of the four letter variety.
Enjoy your coming city taxcapades.
Posted by: gordon | January 6, 2009 5:43 PM