Thursday, July 12, 2012

Mason Home Owners to Avoid Income Tax Increase?

If you read the Enquirer's Mason Buzz Blog, you would learn about a ballot issue that if passed in November would implement a 0.12 % increase to the Mason income tax, taking it to 1.12%. Here's the rub. The blog post indicates that this increase would apply to only "nonresidents." If you read the proposed ballot language, then you would read something very different:
Section  10.05  FUNDING OF SAFETY, FIRE AND EMS SERVICES Mason shall raise funds to pay for safety, fire and EMS services through two revenue sources.  First, a continuing real estate tax levy not to exceed 5.0 mills may be imposed on Mason real estate commencing in tax year 2013 for collection beginning in 2014.  This levy shall continue until changed by the electors of Mason through an amendment to this charter provision.  Second, a not to exceed .0015 tax on income shall be collected by Mason in the same manner as the income tax set forth in section 10.04 of the Charter, with the exception that those who own and live in homes in Mason, and who therefore pay the real estate tax set forth above, shall be exempted from the not to exceed .0015 income tax along with their dependents.   

This income tax shall be imposed starting on January 1, 2013 and shall be at a rate of .0012 during calendar year 2013, and cannot be changed except by legislative action receiving an affirmative vote of at least five council members, and can only take effect on January 1 of the calendar year following legislative action, provided that such legislative action takes place at least six months prior to the effective date and shall not exceed 0015.
I read the above language and I can see a clear intent to not have this tax increase affect home owners who live in their Mason home. The key section is "with the exception that those who own and live in homes in Mason, and who therefore pay the real estate tax set forth above." Furthermore the most telling phrase is "own and live," with the conjunction indicating both are required. It does not say "and/or." It does not say "residents". Renters would be subject to the tax increase in my amateur option, while home owners would not. I don't know if this ballot language must be vetted by anyone else, but I think the blog post was wrong or at least the language is not what the reporter was told it meant.

This is a common Republican and Libertarian theme: give more rights and benefits to property owners. Hamilton County did something vaguely similar by increasing the sale tax to fund the two stadiums while lowering the property tax, a boondoggle in favor of property owners, one we are feeling the pain of presently. The difference is that Hamilton County didn't limit the tax increase to only non-property owners.

This is a nightmare for Mason. It is a clear redistribution of wealth, in favor of of the rich. In case you wondered, homes in Mason are, on average, out of the reach of lower and a majority of middle class people.

According to the article, many are opposed to it because it would affect those working, but not living in Mason.  They don't seem to notice it would affect those renting an apartment in Mason and taxing them more no matter where they worked.

The big thing missing in this ballot language, likely on purpose, is how to enforce the tax rate variance. Private payroll systems will have a difficult time defining "property ownership" so they would either charge the 1.12% on everyone with a Mason address or 1% on everyone, leaving them to deal with the difference on their own.  I supposed those who know their tax rate could request the correct percentage, but then it all comes back to more work for those filing and processing tax returns.

This is just bad policy.  Mason needs to raise taxes, obviously, but they should do so fairly to all, not to the benefit of home owners.  I would bet the massively Republican city will vote this (and any) tax increase down, even though a majority of voters would not be affected.  Mason City Council members are so incredibly gutless to not do this via an ordinance.  Seeking political cover over a major issue is not uncommon in government, it is just unseemly.


  1. Definitely not business friendly.
    I'm assuming a non-resident who owns rental property in Mason would also have to pay the tax due to the rental income he receives?

  2. If you think that this type of tax is a common Libertarian theme then I am afraid you have a fundamental misunderstanding of what it means to be Libertarian.

    I agree with you that this is bad policy, especially if Mason hopes to attract more business to relocate there. However, Mason's record of passing tax increases is markedly better than other suburban locales. Its most recent attempt to pass a levy did narrowly fail but prior to that they had a very good pass rate in comparison to West Chester and other exburbs that are unwilling to fund their school districts.

    1. Josh,

      A common theme among Libertarians is to give voting rights on property taxes only to property owners. Not all libertarians, but the Republican leaning ones for sure.

    2. wow - please cite examples. I have heard right wingers say this but never libertarians.

    3. I think he is talking about faux libertarians, which of course aren't really libertarians. Tea Party would be the best description I suppose.


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