Thursday, November 30, 2000

Councilman pushes tax break

Small-business owners to benefit

By Robert Anglen
The Cincinnati Enquirer

        Cincinnati's small-business owners are paying about 7 percent more in taxes than those who work for someone else in the city.

        That has Councilman Pat DeWine pushing a plan to give deductions from the city's earnings tax to those who are self-employed.

        “Unlike the federal government, the city of Cincinnati does not allow self-employed individuals to exclude one-half of the federal self-employment tax from income,” Mr. DeWine said.

        “It's not right. It's another way we discriminate against small-business owners.”

        His proposal would allow the self-employed who pay the city's earnings tax to deduct half of their federal self-employment taxes.

        Finance Director Timothy Riordan says the move could cost the city $672,000 in revenue and complicate the collection of the city's earnings tax.

        “We don't allow deductions for other variable taxes,” he said. “This way we will end up with 5,000 to 8,000 refunds every year, about double the amount of refunds we now have.”

        Of the nearly $245 million the city takes in from earnings taxes, Mr. Riordan estimates about $9 million comes from those who are self-employed or are in partnerships, which also would be affected by the proposal.

        A public hearing is scheduled next week on the proposal and Mr. DeWine said he hopes City Council will pass his plan before the end of the year.

        Councilwoman Alicia Reece, who has supported the proposal, calls it an issue of fairness.

        She said the city needs to take steps to make people come into the city, referring to U.S. Census Bureau estimates that show the city has lost 9.2 percent of its population since 1990.

        “Why should small businesses take the burden on their backs?” said Ms. Reece, who chairs the council's committee on small business.

        “Sometimes it's hard for people to think outside the box.”


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