pay income tax only where you live

[kc8tbe]

I work and live in different cities. Some people even work and live in different states. In the US, you pay income tax to both the municipality where you work and the municipality where you live. Typically, the municipality where you live will let you deduct the income tax paid to the municipality where you work. For example, I live in Reading, Ohio and work in Cincinnati, Ohio. Because the income tax rate is higher in Cincinnati, I don't actually have to pay any income tax to Reading.

A socially and fiscally conservative friend of mine suggested that people really ought to pay income tax only to the municipality they live in. He made a couple of (I thought) really good points:

• I can't vote in Cincinnati, so I effectively have no say in how the income tax I pay to Cincinnati is spent. This is literally taxation without representation.
• Cincinnati has no incentive to make me want to live in Cincinnati -- they only have to make the region attractive to my employer. This partly fuels urban sprawl.

What would it take to change the rules so that people only pay income taxes to the municipalities they live (and can vote) in? What would be the potential downside of doing this? Note that I am talking about income tax paid by me as distinct from the income and payroll taxes paid by my Cincinnati-based employer to Cincinnati, the latter of which seems totally fair.

[Mr. Coffee]

Fuck, by your friend's retard reasoning then I should stop withholding employee taxes on a couple of the laborers I have who spend a good part of the year living back home in Mexico and give the money to the Mexican government instead because they don't technically live here.

Lemme explain it like this...

You pay the taxes where you make the money. I've done work where I've lived in one city/state, lived in another, and paid income taxes in the city/state where I worked, and I can understand why they do that because the taxes generated go towards upkeep of the municipality I work in (which is nice because things like law enforcement/Fire Rescue, public works/infrastructure where I work is nice to have). You see this in a lot of areas where not a lot of people live, but a lot of people work. If we did it as your friend (who sounds like a complete fucking retard typical Republican), then place where you work won't have as much money to spend on fun things like cops, and fire fighters, and road crews, and shit. Things like that go away from lack of funding and the employers start to go away, taking their jobs with them, and you're left either looking for a new job, moving to new town to keep your old job if that option's available to you, or you go hang out with the Tea Baggers bitching about how the evil government taxes are unconstitutional or some retarded shit.

So basically, if you want to pay Reading taxes, then get a job in Reading, if you want to be politically enfranchised in Cincinnati where you work then move to Cincinnati.

[Ritterin Sophia]

First of all we've established that the job is in Cincinnati, it follows then that in order to conduct business in Cincinnati you have to make use of Cincinnati's infrastructure. You owe them.

[kc8tbe]

Attempting to summarize arguments thus far:

• I use infrastructure provided by the city in the course of my employment, so I "owe" them taxes for it.
• If the city lost income tax revenue it would lose financial viability.

It's not that I have a particularly strong opinion on this issue, but inasmuch as responses are one-sided I feel obliged to play devil's advocate:

• Workers who telecommute don't use the city's infrastructure but still have to pay personal income tax to the city. Meanwhile tourists and daily visitors to the city do use the city's infrastructure but don't have to pay personal income tax to the city. It would not seem that income tax is actually linked to infrastructure use. What I "owe" to the city I pay in sales tax and, through my employer, in payroll tax.
• Suburbs are somehow able to remain viable (in fact, many are more desirable places to live than the city) with much less personal income tax revenue than the city receives. If lost income tax revenue were to somehow force my employer to leave the city then, if historic trends are any guideline, my employer would simply move my job to the suburb. This would be a net gain both for me and for the place where I actually live and vote.

I actually want to live close to where I work, but I don't because the neighborhood sucks. Moreover, enough of the people who live in said neighborhood actively oppose gentrification that things like noise laws and mass transit that would make the neighborhood a more desirable place to live -- but consequently raise property values and property taxes -- consistently get voted down. This encourages people who can afford to live outside the city to do so, and it's viable only because the city has access to my personal income tax revenue. If that revenue stream were phased out, the city would have to actually make people want to live inside of it. Hopefully this would reduce urban decay in the long run.

[Ritterin Sophia]

Workers who telecommute don't use the city's infrastructure but still have to pay personal income tax to the city.

Yes, they do. Sidewalks, roads, bridges, railways.

[kc8tbe]

Workers who telecommute don't use the city's infrastructure but still have to pay personal income tax to the city.

Yes, they do. Sidewalks, roads, bridges, railways.

Do you understand what a telecommute is? These are people who don't actually set foot in the city, except maybe once a month for a face-to-face employee evaluation.

[Simon_Jester]

The business that pays them to telecommute still profits from the local infrastructure even if the workers never set foot on it. Because while that business may have all its direct work done in dispersed locations by remote control, the bricks-and-mortar side of the business still needs a supporting infrastructure: utilities, maintenance crews, streets for those people to access the site, law enforcement to keep the site from being robbed and the business's servers destroyed, and so on.

Thus, you're still doing your work under the umbrella of someone else's infrastructure, and it is still a legitimate need to pay for that infrastructure.

[The Duchess of Zeon]

In most places in the US you can file so that you don't have to pay state income tax in your home state on income already taxed elsewhere, or vice-versa, making this a relative nonissue.

[Phantasee]

Wait, this is income tax collected by cities? What the fuck? I thought counties and municipalities could only collect property taxes? I know you have them collecting sales taxes as well, which is slightly absurd from my Canadian perspective, but income taxes?

[Mr. Coffee]

[*] Workers who telecommute don't use the city's infrastructure but still have to pay personal income tax to the city. Meanwhile tourists and daily visitors to the city do use the city's infrastructure but don't have to pay personal income tax to the city.

Tourists pay it via sales taxes on goods and service bought while in that locale, dingus. As far as telecommuting goes, how often does that person actually go to a physical office and what's the proximity to them and that office? Also, unless you're complete fucking retard and don't bother to look (i.e. you're probably to stupid to have a job that involves telecommuting), you've probably found any relevant tax loopholes that keep you from paying any taxes to the municipality your company's physical offices are located in.

It would not seem that income tax is actually linked to infrastructure use. What I "owe" to the city I pay in sales tax and, through my employer, in payroll tax.

Do you drive on their roads? Do you benefit from law enforcement protection from that city? If you had a heart attack their would you benefit from their EMS? If yes, then pay your fucking taxes and quit bitching (or go talk to a qualified tax attourney to see about what you can do to minimize your tax liability like I do). Also, as far as payroll taxes go, those are usually withheld for state and federal level taxes. In thirteen years of withholding employee taxes I've not seen a "local" withholding.

Suburbs are somehow able to remain viable (in fact, many are more desirable places to live than the city) with much less personal income tax revenue than the city receives.

You know, goods and services providers that the locals tend to use as they're right there in the neighborhood, which means sales taxes. Then there could also be local personal property taxes, fees for services like trash pick up, revenues generated by local law enforcement from fines, fees for use of certain municipal recreation services like public pools or golf courses, ect. Meanwhile, that low population/high employment area doesn't have much of that stuff and instead relies on other sources of income in order to maintain their area.

If lost income tax revenue were to somehow force my employer to leave the city then, if historic trends are any guideline, my employer would simply move my job to the suburb. This would be a net gain both for me and for the place where I actually live and vote.

Depends on the type on employer. Some small business, sure. Large corporation, not so much. Large corp is going to want a place where they've got the space and services they need that's also willing to cut them a break on taxes and other overhead costs in order to make doing business their more profitable. Passing on those tax saving for the company onto the laborer is pretty old hat.

I actually want to live close to where I work, but I don't because the neighborhood sucks. Moreover, enough of the people who live in said neighborhood actively oppose gentrification that things like noise laws and mass transit that would make the neighborhood a more desirable place to live -- but consequently raise property values and property taxes -- consistently get voted down.

Then you work in the ghetto. Suck's to be you, but like I said, if you don't like it then go find some place else to work.

This encourages people who can afford to live outside the city to do so, and it's viable only because the city has access to my personal income tax revenue. If that revenue stream were phased out, the city would have to actually make people want to live inside of it. Hopefully this would reduce urban decay in the long run.

The city should do that anyway, but at the same time they've also got to make sure tokeep their corporate citizens happy or else they'll end up like fucking Detroit.

[TimothyC]

Wait, this is income tax collected by cities? What the fuck? I thought counties and municipalities could only collect property taxes? I know you have them collecting sales taxes as well, which is slightly absurd from my Canadian perspective, but income taxes?

In Ohio you end up paying Federal, State, and Local (City/Village/Township) income taxes. If you are unlucky you also have to pay income taxes to the school district that you live in. If you are very unlucky your employer violates the law and doesn't take them out, easily leaving you with a bill that is 2-5% of your income once a year. There are also property taxes which show up for county, local (again, city/village/township), and school district*.


*Quick explanation with school districts. A School District can extend beyond one local government, and can get really weird some times. The one I live in contains all of the city that I live in, the adjacent township, and because of a city on the other side of the township expanding, part of that city as well.

[Alphawolf55]

You might be able to have your taxes go to one state and if they find that there's enough commuters have the states work out deals. For example, NJ, Rhode Island and Connecticut really should be helping to pay NYC's MTA system since they all benefit greatly from it but don't really contribute, so dual taxes help. At the same time, it sound skind of like being double taxed.

That's why I personally think there should be a generally high flat tax and have the Federal Government be more in charge of funds.

[fgalkin]

Workers who telecommute don't use the city's infrastructure but still have to pay personal income tax to the city.

Yes, they do. Sidewalks, roads, bridges, railways.

Do you understand what a telecommute is? These are people who don't actually set foot in the city, except maybe once a month for a face-to-face employee evaluation.

Why the fuck would you be paying income taxes in a place you never go to? You'd list your house as your primary place of employment and pay only local income taxes, making your point moot.

Have a very nice day.
-fgalkin

[Phantasee]

We have property taxes going to our school districts, but income taxes too? We pay for education through our provincial taxes (and a little bit of everyone else's in Canada through transfer payments iirc).

[TimothyC]

We have property taxes going to our school districts, but income taxes too? We pay for education through our provincial taxes (and a little bit of everyone else's in Canada through transfer payments iirc).

Some districts do. It partially comes out of a series of Ohio Supreme Court rulings that found that funding schools via property taxes was unconstitutional (DeRolph vs. State, 1997).

This hasn't stopped most districts from using property taxes for a majority of their funding.

[tim31]

You pay income tax where you work
You spend money on services and amenities where you live

What's the problem?

[kc8tbe]

Your employer pays property taxes where you work
You pay property taxes where you live
Your employer pays earnings and payroll taxes where you work
...but not where you live
You pay income tax where you work
You pay income tax where you live
You spend money on services and amenities where you work
You spend money on services and amenities where you live

What's the problem?

If income tax is a use tax, why does it also go to my place of residence? Why do we also have payroll tax?
If income tax is a personal tax, why don't you (necessarily) have a vote where it is spent?

My (convservative) friend is (amazingly) not arguing for a reduction in tax. He is arguing for a (ironically?) redistribution of where existing tax revenue goes. In this (rare) case I tend to agree with him. I think cities should have more incentive to become livable places and less incentive to become whores for corporate employers whilst neglecting their voting citizens.

And yes, telecommuters pay income tax to their employer's municipality in addition to where they themselves live.

[Alyeska]

Your employer pays property taxes where you work
You pay property taxes where you live
Your employer pays earnings and payroll taxes where you work
...but not where you live
You pay income tax where you work
You pay income tax where you live
You spend money on services and amenities where you work
You spend money on services and amenities where you live

What's the problem?

If income tax is a use tax, why does it also go to my place of residence? Why do we also have payroll tax?
If income tax is a personal tax, why don't you (necessarily) have a vote where it is spent?

My (convservative) friend is (amazingly) not arguing for a reduction in tax. He is arguing for a (ironically?) redistribution of where existing tax revenue goes. In this (rare) case I tend to agree with him. I think cities should have more incentive to become livable places and less incentive to become whores for corporate employers whilst neglecting their voting citizens.

And yes, telecommuters pay income tax to their employer's municipality in addition to where they themselves live.

You directly benefit from the services rendered for your place of business. Is that concept too difficult for you to understand?

[Ritterin Sophia]

My (convservative) friend is (amazingly) not arguing for a reduction in tax. He is arguing for a (ironically?) redistribution of where existing tax revenue goes.

Then your conservative friend is a dumbass. Your employer benefits from that infrastructure and thus you are benefiting from it. Without that infrastructure doing business there starts looking less attractive and businesses leave, then you get a situation where no one can afford to pay for the infrastructure due to no money being made in the district and it all spirals from there, welcome to Detroit Mk2.

In this (rare) case I tend to agree with him.

Then I guess you're a dumbass too.

[Knife]

It is another case of someone being so wrapped up in how much they pay, they're not paying attention to how much they're getting back out of it.

[Soontir C'boath]

By having Reading residents who work in Cincinnati pay their income tax, Reading loses out on taxes for their services/infrastructure that he uses to go to work et al, and that taxes to Cincinnati for their infrastructure is already being paid by the company is what I think he's arguing.

I think in his mindset, it's not like the company in Cincinnati is paying for Reading's fire department* et al if he needed it.

*Hypothetically speaking as I don't know if they do in fact have their own fire department et al.

You might be able to have your taxes go to one state and if they find that there's enough commuters have the states work out deals. For example, NJ, Rhode Island and Connecticut really should be helping to pay NYC's MTA system since they all benefit greatly from it but don't really contribute, so dual taxes help. At the same time, it sound skind of like being double taxed.

Definitely NJ and Connecticut but Rhode Island?

[fgalkin]

And yes, telecommuters pay income tax to their employer's municipality in addition to where they themselves live.

Only in a few states, as the article itself says.

Have a very nice day.
-fgalkin