Saturday, February 03, 2001

Kenton Co. tax protest suit grows

More of annual wage being taken

By Cindy Schroeder
The Cincinnati Enquirer

        COVINGTON — More parties have entered the lawsuit challenging Kenton County's recent payroll tax cap increase, saying it guarantees an automatic tax increase each year.

        Seco Electric Inc., a Covington electrical contractor; employee Joe Schamer Jr.; and the Greater Cincinnati Building and Trades Council on Friday filed a motion to intervene in the lawsuit filed last week by the city of Covington and Corporex Cos.

        Kenton County's payroll tax cap, or the maximum amount of annual salary on which taxes can be collected, was raised from $25,000 to $80,400 on Jan. 1, in line with the Social Security cap. County officials plan to use the additional $5 million in tax revenues to offset the costs of expanding and renovating the crowded jail in downtown Covington.

        Joe Schamer Jr., whose family started Seco Electric, said the new cap places “an onerous burden” on Kenton County workers and businesses.

        “Essentially, Kenton County Fiscal Court is attempting to impose a hidden tax,” Mr. Schamer said. “To make matters worse, the county fiscal court is telling us that we don't get a credit for city taxes paid because they did not "increase' our taxes. We're just paying more.”

        Scott Kimmich, Kenton County deputy judge-executive, referred all questions on the latest challenge of the county's payroll tax cap hike to Sheryl Snyder, a Louisville lawyer who is advising the county on the issue. Mr. Snyder said the fact that the tax is geared to the Social Security maximum does not affect its legality.

        Lawyer Mark Guilfoyle, who filed Friday's action with co-counsel Patrick Hughes, described the annual tax increase as the county's “dirty little secret.”

        Tying its tax cap to the Social Security maximum guarantees a tax increase every year, Mr. Guilfoyle said. This year, the Social Security cap went from $76,000 to $80,400.

        “Over the last four years, the Social Security maximum has increased by $15,000,” Mr. Hughes said. “We believe the county's payroll tax scheme is arbitrary and capricious and in violation of the Kentucky Constitution.”

        Covington's suit asks a Kenton Circuit Court judge to determine whether the new taxes collected by the county would be subject to tax credits, which would enable workers to credit city payroll taxes against county taxes.

        Under legislation passed last year, any new payroll tax or increase after Jan. 1, 2000, would be subject to tax credits.


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