(The Center Square) – With more employees working from home rather than offices, Ohio’s income tax laws continue to be challenged, and the latest opposition comes in the General Assembly.
Sen. Kristina Roegner, R-Hudson, has introduced a bill that returns the state’s income tax law to pre-pandemic regulations, meaning most employees pay taxes in the city they live and the city the work. Since last March, however, many employees are working and living in the same city.
Senate Bill 97 repeals a pandemic stopgap passed by the Ohio Legislature last spring that allowed cities that are the home to businesses to continue to collect income taxes from employees who worked from home in another community.
If passed, according to Roegner, the bill simply returns Ohio to its original law of allowing municipalities to tax employees where they work and where they live.
“After a couple of months (of the pandemic), you set up a situation where I believe is unconstitutional,” Roegner said. “You have people paying taxes to a city the people have not set foot in in months.”
The General Assembly scrambled last spring to make adjustments to laws as the pandemic worsened. Issues such as school attendance, graduation requirements, school testing, driver’s licenses and vehicle registrations and income taxes were addressed.
Lawmakers froze income regulations at the time in an effort to keep the revenue cities had budgeted for before stay-at-home orders and companies required or offered employees the opportunity to work from home.
“We didn’t want there to be a sudden shock to the system in terms of taxes,” Roegner said. “We all thought it was two or three weeks to flatten the curve. Low and behold, this pandemic has dragged on.”
Opposition likely will come from Ohio’s largest cities, which are home to some of the highest number of employees working in one city while living in another. Many of those workers tend to have higher paying jobs, and many of those cities tend to have higher tax rates. Removing those workers from large city tax bases significantly would shrink government revenue streams.
The Buckeye Institute, an independent research and education group, filed lawsuits earlier this month on behalf of Eric Denison and Josh Schaad against the cities of Columbus and Cincinnati. The lawsuits ask the court to declare unconstitutional Ohio law that allows cities to tax workers who do not live and have not been working in those cities.
Roegner introduced a similar bill in the last legislative session, but it failed to get out of committee. She hopes for at least a hearing on the new legislation. She also said she plans to offer it as a budget amendment.
“It’s such a simple bill. All it does is repeal what we did,” Roegner said. “Let’s go back to the way things were before the pandemic. I hope I will get at least a first hearing on the bill. I’m also going to introduce it as an amendment to the budget. I’ll keep pushing my caucus that it’s the right thing to do.”