The city's 2.1 percent earnings tax is levied on those who work or live in Cincinnati. But local executives - some of whom exercise millions of dollars in stock options - are not taxed on this form of compensation.

Stock options are a form of compensation that allow employees to buy company stock for a preset price, frequently less than the market price.

Councilman John Cranley said Cincinnati may be the only major city in Ohio not taxing stock options, but it also has the most at stake. More than a half dozen Fortune 500 companies are headquartered downtown. "It would be silly to try to squander that," said Cranley, who chairs the finance committee. "It would be a bad message to send out at this time."

For more than a decade, Cincinnati has been locked in an economic development battle with Northern Kentucky and burgeoning suburbs.

At one time, those who received stock option income from a Cincinnati-based company had to pay the city tax on those earnings. Two downtown companies - Jacor Communications Inc. and Omnicare Inc. - relocated to Covington in 1997, citing the stock option tax as the primary reason for the move. City Council decided to stop taxing stock options in 1998

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