If you own a small business in Ohio, and do your taxes yourself, you have encountered one of the worst website designs ever: The Ohio Business Gateway.
What should be a simple process: enter your account (each business has a vendor ID number) and a dashboard with the forms you are required to enter and due dates should be displayed.
Instead: you get access to every form possible, with the onus of knowing what you have to do on the small business person. Not only that, the “Ohio Department of Jobs and Family Services”- a fancy name for “Unemployment”- still requires you to fill out a paper form and send it in- after you have done it online. This is totally unacceptable.
Local income tax collection is also a municipality by municipality affair- instead of being centralized at the State level.
Small business is how big business gets started. The last thing the State needs to do is be collecting fines and wasting resources on collecting taxes through a system so obtuse only an accountant or IRS man could love.
Simplify the system for small business and you will see more small business growth.
No, no, that would be too easy, plus it would probably cut-out several fat a$$ “administrators” enjoying all those nice benefits and inflated pay provided by the State of Ohio, all of which is at our expense.
Dayton used to collect the income withholding taxes for all the local juridictions. Now almost every area government has moved to their own collection department or outside contractors. Why? Because they are able to do a better job identifying who wasn’t paying and each one has increased their collections.
Do you think the state could actually do better collecting for a 1,000 cities?
Bruce, in Ohio’s previous “pay for play” environment, the only people collecting more efficiently were the private contractors who were lining their pockets.
Does it really make sense for the State NOT to collect local income taxes- when they are already collecting the state one?
How much duplication of services do we need?
I’m surprised I haven’t heard about the Admiral Benbow Hotel coming down on here. What’s your take on this?
One thing that might help the state collect and distribute local taxes more efficiently would be if there were a statewide, uniform local tax rate. As it is, the rates can vary by 2 percent (or more) from city to city.
Having one rate would make payroll deduction easier and more accurate, and you wouldn’t even need to file a local tax return unless you were self-employed.
Of course, our friends who live and work in the tax-free zones wouldn’t like that very much.
David,
It is not an insurmountable challenge for the state to take on but .. The largest problem is identifying what juridiction the individual taxpayer and business are located in. These jurisdictional borders (tax zones) are not clearly delineated by zip code or other easily refrenced database. It takes each locality to carefully review each address to see if it is in, out, or in a another jurisdiction which may require revenue sharing. I’m not saying this can’t be done but it will continue to take someone from each community to police the database regularly as well as identify non-reporters.
Pam’s statewide rate could only apply to incorporated areas as townships are presently not permitted to collect income taxes. And the boundary databes would still be an issue.
Bruce-
You assume we keep using the rules that are in place.
It is easy to geolocate each taxpayer and each business- it’s called using a database. With one tax rate applied- and the shares going to communities differently – some of the “revenue sharing” issues go away.
Then why not just have a higher state rate and do away with all the local rates altogether. The state would allocate those new monies on a new formula. Now what do you want to do about all the different sales tax rates in each county?
Hi Bruce-
I’m actually for a slightly higher state income tax rate and a new distribution formula. Just the money saved in accounting and managing the locals will be a huge bonus to both business- and the government.
Same on the sales tax. The recent change to demand sales taxes to be tracked by county was INSANE- esp. for online vendors.
The best way to get the most out of taxes is KISS- keep it simple, stupid.
David,
There is a standard collection formula many states are adopting that simplifies the calculations of businesses that do business in multiple states. So far Ohio has not adopted the plan. Kentucky, Indiana and Michigan have (and maybe other neighbors).
One other tax revenue Ohio is missing is the sales tax on food to go. All six states surrounding Ohio charge the sales tax on food to go.
Bruce, Ohio doesn’t charge tax on food. Restaurant food is charged a hospitality tax, not a sales tax. Food to go is considered the same as groceries.
I think it’s good that we don’t charge tax on food. It’s one of the most regressive forms of taxation out there- since no matter how poor you are- you still have to eat. Other states charge tax on food.
It’s not as important right now to figure out what to tax- but how to make it easier to run a business and pay the taxes easily.
What to tax runs hand in hand with how to make it easier. The less unique, the register programming and reporting, from state to state will make it easier.