LOCAL INCOME TAXATION IN THE UNITED STATES WITH SPECIAL REFERENCE TO THE STATE OF OHIO

s of Doctoral Dissertations 81 with definitions, collection, and reporting techniques prevailing under the federal income tax. The impact of multiple local taxation of income can and should be mitigated by the adoption of local credit provisions. State income tax developments have provided an appropriate guide to local policy with respect to this problem. A city income tax, if adopted, should be considered a permanent part of the municipal revenue system. An adequate and continuing audit-enforcement program is clearly essential to effective administration of the tax. This tax permits a city to tap the resources of its own population and, in addition, to tax effectively adjacent fringe areas which make little or no property tax contribution to central city revenues. It appears to be a singularly appropriate tax for central cities in metropolitan areas. Assuming the legality of local income taxation, state policy must determine whether co-ordination of a patchwork quilt system of income taxation is to be left to the variable co-operative impulses of levying cities or whether state control is required in the interests of uniformity. Assuming that the later decision is made, several questions arise: (1) Is a tax rate ceiling appropriate? (2) Is ordinance uniformity to be required? (3) Is mandatory reciprocal deductibility on a uniform basis to be the rule, and, if so, which is to be given priority, the city of the situs of earnings or the city of the taxpayer's residence where they differ? With respect to the first two of the foregoing questions this study concluded that, in the initial stages of local income tax development within a state where the authority to levy is restricted to municipal governments, a rate ceiling is not required. The power can be held in reserve. During the period considered, city income tax ordinances followed the Philadelphia-Toledo pattern with only minor deviation. No readily apparent need for state-directed ordinance uniformity was noted. With respect to the question of overlapping city income taxation, Pennsylvania adopted a policy of legislative control. Ohio municipalities have in most instances worked out provisional solutions on their own initiative, and legislative action at the state level has not materialized. This study concluded that, when and if a state adopts uniform rules, priority should be given to the city of the situs of earnings rather than the municipality of residence. This conclusion was based on the fact that the revenue need of large urban centers is frequently more than that of smaller fringe areas. Moreover, giving the city of residence priority in this type of taxation merely stimulates the adoption of income taxes by the circle of fringe suburbs around any particular central city. This content downloaded from 157.55.39.58 on Tue, 11 Oct 2016 04:28:45 UTC All use subject to http://about.jstor.org/terms 82 The Journal of Finance City income taxes provide one means by which cities may obtain significant supplemental revenue without increased dependence upon higher levels of government. Provided that adequate personnel are obtained and efficient administration is established, most defects of this revenue source can be corrected. The city income tax as it has developed in the last decade provides a useful addition to the rather restricted number of fiscally significant local taxes; its use provides an effective supplemental means for the fiscal implementation of municipal home rule. This content downloaded from 157.55.39.58 on Tue, 11 Oct 2016 04:28:45 UTC All use subject to http://about.jstor.org/terms