During the regular Wilmington City Council meeting on June 2nd, it became clear very quickly that we have a problem. No, I am not referring to feral cats. I am referring to the dearth of understanding of the Municipal Income Tax for the State of Ohio by our local leaders. Here are some very important points…

Let’s stop calling it an earnings tax…

I get it. I have been guilty of it (see my last podcast). But we have to stop this. The language in the resolution and ordinance provided for a great deal of confusion last night, and it unfortunately it was never cleared up by our Law Director or any other city officials. In the resolution to place the tax on the ballot, it is called an Earnings Tax. Everywhere else, including in our current ordinance, it is called an income tax. This is what the State of Ohio calls it, specifying that municipalities can only tax earned income. The confusion comes from wanting to specify that cities only tax earnings. It is important for Council and other local leaders to understand and communicate this fully to the public, lest there be more confusion.

Residents are taxed!

Residents of the city and non-residents are currently taxed at 1%. If you live in Wilmington and work in Cincinnati, for example, you will have to pay the income tax in Cincinnati because it is higher (2.1%). The City of Wilmington will give you a 1% credit, so you will not owe any taxes to the city. However, you must file with the City of Wilmington, as well as Cincinnati. Otherwise, you might get to pay some penalties. Additionally, if you live in the city but work in a place without a local income tax, you will have to pay that 1% to Wilmington.

I hope this clears up a few confusing points that I believe hindered the discussion last night.