By John Kiesewetter
The Cincinnati Enquirer
Wyoming and Indian Hill voters get to make an important money decision Nov. 4.
But officials aren't sure how much cash is involved.
"We don't have a clue, because of the way our taxes are structured," says Irma Ivey, Wyoming tax commissioner.
The two affluent bedroom communities, which have virtually no industry or commercial property, are the only Hamilton County suburbs which tax residents' incomes, instead of employees' earnings.
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At issue Nov. 4 is whether the two suburbs - and 22 other communities in Ohio - can continue to tax income from "S Corporations," a type of partnership authorized under federal income tax law.
In 1988, Wyoming and Indian Hill voters approved taxing S Corporations. An Ohio law enacted early this year requires communities again to seek approval by voters for taxing that type of income.
The frightening thing for these two suburbs is that nobody knows how much tax revenue is at risk. The two cities simply tax a person's adjusted gross income, a lump sum on tax returns that includes wages, interest earnings and stock sales.
"So we can't tell specifically how much is S Corporation income. We just don't know," says Connie Eberhart, Indian Hill tax commissioner.
In Indian Hill, the 0.3 percent income tax generates $2.1 million, about 25 percent of the general fund. Wyoming's 0.5 percent income tax brings in $1.9 million, about 36 percent of the general fund. In both communities, schools are the largest employer, followed by the city government.
"Who knows what voters will do?" says Mike Burns, Indian Hill city manager. "We suspect that most people will say, 'Let's keep doing things the way we're doing them.' "
If voters reject the measure and exempt S Corporations, "it could have a significant impact on our income tax collections. It's a real concern for us," says Robert Harrison, Wyoming city manager.
Why is this an issue 15 years later? Because legislators have been asked by the wealthy to exempt these special partnerships, says Gary Gudmundson, spokesman for the Ohio Department of Taxation.
"There is an effort within the Ohio General Assembly to restrict the ability to tax income generated by S Corporations... (from) affluent communities, and the people who live there, who are the people who tend to own these S Corporations," Gudmundson says.
The legislature also wants "to bring some uniformity to municipal income tax systems. Hundreds of municipalities are imposing this tax, and they each have their own rules and regulations," Gudmundson says.
No organized opposition has surfaced in Wyoming or Indian Hill. Both cities are mailing information to every home this month.
If the measure fails, the cities may have to raise income taxes. .
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