Cincinnati Public Schools’ Board of Education made history when it voted 5-2 in support of an earned income tax levy – the first tax of its kind the district has ever proposed to voters.
At a rate of 0.75%, the tax amounts to $750 annually for someone with a yearly income of $100,000. And for a salary of $54,500 – the average earned income for those living in the district – the tax would amount to $408 annually, or $15.72 per paycheck.
The tax would generate $74 million annually for the district, with potential to increase up to $2 million annually as residents’ wages grow, district Treasurer Mike Gustin said at the board’s July 27 special meeting.
But what income would be eligible for the new tax? And who in Cincinnati would be responsible for paying it? Here’s the breakdown on what the district is asking of voters this November.
What types of income would be taxed?
The 0.75% tax would apply only to earned income like wages, salaries, tips and net earnings from self-employment.
It would not apply to Social Security benefits, pensions or other retirement income or investment income.
Does it apply to everyone who works in Cincinnati?
Unlike city income tax, school income tax applies only to residents of the school district. That includes some places outside city limits, such as Cheviot or Amberley Village.
District boundaries can be viewed on the school district’s web site.
People who work in Cincinnati but live outside of the district’s boundaries would not be taxed under the proposal.
Why is Cincinnati seeking an earned income tax?
It’s been a decade since the region’s largest district passed a new-money levy. In 2016, the district passed a 7.93-mill, five-year property tax that raised about $48 million for the district’s preschool program. New funds for general operating costs were last secured in a 2008, from a 7.89-mill levy that lasted five years.
CPS’s levy vote mimics a trend among districts across the region resorting to income taxes given the property tax fatigue felt by some homeowners.
This article originally appeared on Cincinnati Enquirer: Would Cincinnati schools’ income tax apply to everyone in the city?
Reporting by Grace Tucker, Cincinnati Enquirer / Cincinnati Enquirer
USA TODAY Network via Reuters Connect
By Grace Tucker, Cincinnati Enquirer | USA TODAY Network
