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Local Income Tax

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Back To Main Page of Citizens Guide to St. Paul


Local Income Tax

In August of 2005, St. Paul councilmember Dave Thune asked the following question in the St. Paul Issues Forum:

How about we discuss the recent proposal by green candidate Elizabeth Dickenson that we examine the possibility of a city income tax to offset the regressive property tax or user fee.

See discussion: http://forums.e-democracy.org/topic/59504

On Sunday August 28th, the Pioneer Press editorial board weighs in against a St. Paul Income Tax.

This page is set up to provide some basic information on local incomes taxes and their potential impact on St. Paul:


Arguments in favor of Local Income Tax:

  1. Income taxes are considered to be progressive taxes while property taxes are considered to be regressive. A progressive tax is one that affects people, at least partially, based upon their ability to pay.
  2. An income tax collects revenue from anyone who lives or works within the city, to pay for city services. Property taxes only affect those that live within the city, meaning that those who work within the city but live outside of it, do not pay taxes for the services that they use on a daily basis.


Arguments against a Local Income Tax:

  1. It will drive away business
  2. Government has enough taxes, they simply need to spend money wiser
  3. People will move away from, or not come to, St. Paul - driving down property values


How Does A Local Income Tax Work?

Several cities in Michigan recently floated proposals for local income taxes that would levie a 1% tax on residents of the city and a 1/2% tax on nonresidents who work inside the city. See: http://www.freep.com/news/locmac/money19_20040419.htm

Here is any interesting FAQ (frequently asked questions) from the city of Oxford, Ohio where they have a local income tax: http://www.cityofoxford.org/faq.asp?categoryid=35

Does the city have the authority to impose a local income tax?

Matt Smith, the city's budget director, in quoted in the Pioneer Press editorial as suggesting that a city income tax would require state approval.


Some cities that have local income taxes:

 

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