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An interesting development is the proposed occupation tax in Huntington. While it would clearly benefit city government in terms of meeting operating expenses, one wonders how it would impact those who work there and the perceptions of competitiveness with other areas for job creation?
I know some towns in Ohio use such a tax, but don't know if it is supplemental there or if it is the primary funding source.
For Huntington, this is less about meeting budget and more about trying to see if something new works. Right now, West Virginia is one of only 2 states that charge a B&O Tax, Washington State being the other. Most other states, including neighboring KY and OH, have income taxes and even local sales taxes. This puts Huntington at a disadvantage for jobs when those areas can offer lower business taxes for new business. Ashland, KY has a 1.5% occupation tax and the rest of the county has a 1.5% occupation tax as well. Over in Ohio, the occupation taxes are as follows for the local cities: Athens, Ohio is 1.65 percent, Chillicothe is 1.6 percent, Coal Grove, Gallipolis, and Ironton, it is 1 percent, Marietta is 1.7 percent, New Boston is 2.5 percent and Portsmouth it is 1.4 percent. Then on top of that, Lawrence County OH has a .5% county sales tax as well. Ever heard of the book Unleashing Capitalism: Why Prosperity Stops at the West Virginia Border and How to Fix It? There's a reason for for that and a big part of it is our business taxes.
This is a chance to change things and see if it works. If it were simply about raising more revenue, they could just raise the user fee a dollar or two and hear less complaining from the people. Makig these changes would benefit all cities and areas of WV as all seem to be having trouble with increasing costs and decreasing revenue. You hear about positions not being filled and budget cuts in all towns. If you remove or reduce B&O taxes, what do you think that will do for business? More business equals more jobs and more jobs equals more people. The only options are to raise more revenue via taxes and fees or cut services. I don't think people want fewer services.
I think you are right. If they do away with the B&O tax (and as a former business owner in Wheeling for several years I was saddled with that) and institute the occupation tax it just might have that effect. One counter argument though is that people who work there but don't live there are paying a disproportionate share for services, and those who work elsewhere but who live in the affected area are getting a disproportionate share of services in comparison with cost. I guess there is no easy solution.
I used to live in Martins Ferry, OH and they had a city income tax of 1% as opposed to an occupation tax for wages earned within the city. Everyone who lived there paid based on wages regardless of where earned.
Do you know if businesses would pay it too? And how about those on fixed incomes like retired folks... is pension income treated as occupational income? It will be interesting to see how this plays out.
Manufacturing businesses would pay no B&O taxes and retail businesses would pay .5% or less, depending on how much revenue is brought in. Anything over $9 million would be put toward lowering the B&O tax further and anything between $7-9 million would be put toward one time infrastructure improvements. Retirement income would not be taxable as it is pension based and not based on a current occupation.
And there is never an easy solution to any type of tax with regards to proportion and use. People who live in Ohio but come to Huntington to use Ritter Park are using a park that those in Huntington and Cabell County pay taxes for while they pay nothing. Is that fair? No, but parks are there for the enjoyment of all. Forty-eight other states have income/occupation taxes and courts have upheld them. One such ruling stated "He (employee) enjoys the advantages of carrying on his business in the practice of his profession in a thickly populated city, which offers many inducements as well as advantages, both in increased business facilities and comforts, not attainable in the county of his residence. He enjoys, habitually and daily, equally with the resident attorneys, the use of the city's improved streets and lights, and is equally protected by its police regulations in his person and property. He has, as they have, the benefit of the night watch to protect his office and his property therein, and the benefit of the fire department in case of fire .” City of Petersburg v. Cocke, 26 S.E. 576, 1897 Va. Lexis 69 (1897).
I would prefer that our tax system be updated for better competition for jobs in this state. Things are looking good for Huntington as six business have or are in the process of opening over the last two months with more planned. Being more business friendly could only help.
I agree, especially in times of high unemployment. One wonders though what effect it would have if businesses had to compete for labor? Would the occupation tax cause a small business to locate in a nearby town or an unincorporated area? It'll be interesting to see how this all plays out.
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