BY LISA DONOVAN
The Cincinnati Enquirer
Cincinnati City Council could decide this week whether to approve tax reforms that would give breaks to first-time city homeowners and incentives to businesses that hire welfare recipients.
Most are contained in the so-called "Tax Reform Act of 1998," proposed earlier this year by Democratic Councilman Todd Portune and Republican Councilwoman Jeanette Cissell.
Several of the measures in the Portune-Cissell package have been adopted.
The idea is to make the tax code more user-friendly and provide incentives to live and work in the city. Most of the reforms center on the 2.1 percent earnings tax on those who work or live in the city.
Several council members have received complaints that include eye-rolling stories of tax collectors tracking down those who owed as little as $1.
The city in May adopted the controversial repeal of the earnings tax on stock options. In May, council voted 7-2 to exempt stock options from the earnings tax, with Tyrone Yates and then-Councilwoman Bobbie Sterne voting no.
It's unclear whether there is enough support to pass portions or all of the remaining measures, which include:
- An income tax credit for first-time home buyers and new residents.
- Reducing the interest rate on delinquent taxes to 10 percent per year; currently the interest rate is 1.5 percent per month, compounded, or 18 percent annually.
- Requiring the city to refund overpaid taxes within 30 days. If not, the taxpayer would receive interest of 10 percent annually.
- Provide a job-creation tax credit that also would reward employers for hiring welfare recipients.
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MEETING TUESDAY
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City council's Finance Committee is to meet at 11 a.m. Tuesday in the third-floor chambers of City Hall, 801 Plum St., to discuss the tax reform package. The session is open to the public.
The committee could forward the tax reform package to the full council for consideration during Wednesday's regular weekly meeting at 2 p.m.
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The city administration has reviewed the package and recommended against several proposals, including the tax credits to first-time home buyers, new residents and employers who add jobs. Then-acting Finance Director Francis Wagner said it would be too complex.
"Each . . . would complicate the city's income tax code with credits and deductions which are exceptions to the simple application of the 2.1 percent tax to income," Mr. Wagner reported in March. But Mr. Portune said he feels "passionate" about those measures and will lobby fellow council members for their support.
"I think the job-creation tax credit is important, especially when I see that in 12 of the city's neighborhoods, 60 percent of the adults don't hold jobs." he said.
Councilman Phil Heimlich said that he and fellow Republican council members, Ms. Cissell and Charles Winburn, had proposed a similar plan and that he would support the measure. "I support anything that reduces the tax burden on those who live and work in the city - that's a message every officeholder needs to hear," Mr. Heimlich said.
While Mr. Winburn said he would support the housing and job creation measures, he added: "I don't know how you can do tax reforms without giving the citizens a tax break on their property taxes and earnings income tax."
But Democratic Councilman Mr. Yates questioned whether the tax incentives for new homeowners and residents might be "gimmickry." "What draws people to urban areas today are peaceful communities with lots of employed people and - No. 1 - first-rate schools," he said.
