Work-from-home job shift brings battle to change decades-old Ohio local income tax law

A Stanford University study released in June found 42% of the U.S. labor force working from home. CONTRIBUTED
A Stanford University study released in June found 42% of the U.S. labor force working from home. CONTRIBUTED

Credit: CONTRIBUTED

Credit: CONTRIBUTED

Ohio lawmakers are debating again how cities should collect income taxes amid the growing work-from-home trend.

One Ohio group says a change in local tax laws would alter a tax structure that’s been in place for more than six decades and jeopardize $306 million annually that Ohio’s six largest cities collect, including Dayton.

Senate Bill 352 and House Bill 754 would “redirect work-from-home employees to pay their income taxes where they live, not where their workplace is located,” according to Alison Goebel, executive director of the Greater Ohio Policy Center, a nonprofit that advocates for cities.

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Dayton Mayor Nan Whaley said she and other members of the Ohio Mayors Alliance are “vehemently opposed” to the bills because they don’t favor the timing.

SB 352 sponsor Kristina Roegner called her proposal an “issue of fairness.”

Roegner, R-Hudson, said “the bill simply restores the law to where it was prior to the pandemic. Senate Bill 352 would direct municipal taxes paid by workers to the municipalities where they work and live. It’s that simple.”

The Dayton Daily News also reached out to HB 754 sponsor state Rep. Kris Jordan, R- Ostrander. His office did not respond by Tuesday afternoon.

Both bills would repeal House Bill 197, a measure approved earlier this year after the coronavirus caused many businesses to shut down or implement a plan for the employees to work from home. It keeps workers paying income taxes to where their employer is located at a time when more jobs are being done from home.

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“Here we are in a period of great uncertainty and to be messing with the tax policy amidst it, we think is a really bad idea,” said Whaley, a Democrat. “There’s so much transition going on and it would be a nightmare for folks to manage when they’re trying to manage everything else.”

Whaley said no significant Dayton employer has told the city that they plan to have their workforce perform their jobs at home permanently .

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Columbus-based Nationwide Mutual Insurance Co., which has an estimated 32,000 workers, is among 27 businesses listed by flexjobs as having recently switched to long-term remote work. Others include Mastercard, Amazon, Facebook, Adobe and Ancestry.com.

“You’re going to find it’s more common going forward without a doubt,” said Bryan Hunter, president of 937 Payroll in Dayton. “To say it’s not going to be a trend going forward, I don’t think you can say that.”

Hunter’s company works with clients on payroll, human resourcesand other services.

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“There’s just no reason anymore for people being uncomfortable doing things remote, for companies to feel like they have to have employees on staff in-person,” he said.

Synchrony Financial, one of Kettering’s largest employers, cited last week a company-wide strategy shift for its decision to send its 1,900 workers to work permanently at home.

The departure of the Stamford, Connecticut-based business with 17,000 workers globally will leave Kettering with a “significant decline in our tax revenue,” City Manager Mark Schwieterman said.

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Whether more companies will make a similar decision as Synchrony, Hunter said, will depend on the economy and what businesses experience in the coming months.

“Although I think the bottom line is ultimately going to win, most people are not going to make any permanent decisions until they absolutely have to,” he said.

“If things don’t change in 2021 vs. what’s happening right now in 2020, then people are going to have to start thinking about permanent shifts, permanent changes,” Hunter said.

BY THE NUMBERS

•$306M: Amount a statewide group says Ohio’s six largest cities could lose if proposed state changes are made to municipal income tax laws.

•4.88M: Total Ohio employment in 2018.

•42: Percent of the U.S. labor force working from home in June.

SOURCES: The Greater Ohio Policy Center, U.S. Census, Stanford University.

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