As part of the 2020 emergency response to COVID, the Governor and General Assembly passed a law that allows cities where employers are located to continue to collect taxes from employees, even if the employees are working in their homes in a different jurisdiction during the pandemic. 

HB157 and SB97 (134th General Assembly; HB754 and SB352 in 133rd General Assembly), and a collection of lawsuits, seek to repeal this emergency measure.

GOPC research argues that making massive changes to Ohio’s income tax collections mid-pandemic is short-sighted and will have decades long repercussions on Ohio’s local and statewide economic competitiveness. 

For over six decades, working Ohioans have paid income taxes to the jurisdiction where they work. Recognizing the unprecedented situation created by the pandemic, the Governor and Legislature established the emergency measure to minimize burdensome paperwork on businesses and moderate the financial impacts of the pandemic on cities.

In two reports, GOPC shows how attempts to repeal the emergency response is short-sighted and will seriously threaten Ohio’s large and small communities, jeopardizing Ohio’s economic competitiveness.

In September 2020, GOPC released A Mortal Threat to Ohio’s Economic Competitiveness, which estimated that Ohio’s largest six cities could lose $306 million annually if the emergency remote worker provision was repealed.

In April 2021, GOPC released Potential Impact of Changing Municipal Income Tax Laws on Smaller Ohio Cities, which is a review of municipal income tax collections among 316 smaller cities and villages.  In the report GOPC examined the impact of the proposed repeal on Ohio’s 16 small legacy cities and incorporates data made available by the Regional Income Tax Authority.

Potential Impact of Changing Municipal Income Tax Laws on Smaller Ohio Cities details that 85% of the 300 small cities and villages examined by the Regional Income Tax Authority can anticipate a net loss of $105 million annually if the emergency measure is repealed. The report illustrates the potential impacts of the repeal proposal on Ohio’s 16 small legacy cities, finding that 62.5% of them can anticipate a net loss in municipal income tax revenue.

Ohio’s cities and villages utilize their income tax revenue to pay for long-term strategic infrastructure and capital investments, such as roadways, bridges, and water quality measures.  These investments have retained and attracted employers, while also benefitting the metro regions surrounding Ohio’s largest cities. 

These Reviews affirms that adjusting the tax code is a complicated proposition and could cause irreparable harm if done hastily and without adequate input from those places likely to be most impacted.