November 4th Earned Income Tax Question and Answer
Sheet
What exactly is an earned income
tax?
An earned income tax is an alternative method of funding schools. An earned income tax only taxes those individuals currently earning an income. It does not tax senior citizens and retirees who are living on retirement and pension incomes.
Why did the Board of Education choose to place an earned income tax on the November ballot?
After the defeat of three new property tax issues in May of 2007, March of 2008, and August of 2008 respectively, as well as hearing the many concerns voiced by retirees and senior citizens, the Anthony Wayne Board of Education voted unanimously to place the earned income tax on the November ballot. The Board of Education decided it was time to seek an alternative method (other than property taxes) to help generate additional revenue for the school district without placing any additional financial burden on people living on a fixed income.
Is there a
benefit to an earned income tax over a property
tax?
In addition to not taxing those on a fixed income, the earned income tax has another important benefit. The earned income tax grows over time. One of the reasons that public schools need to continue to ask voters for additional funds is that school revenue from property taxes remains stagnant while costs and student enrollment continue to rise. Property taxes do not grow over time like an income tax. For example, in 2003, Anthony Wayne voters approved an emergency-operating levy for 4.85 mills. The 2003 emergency-operating levy generated 3 million dollars of revenue for the district. It was renewed this past August for 3.3 mills, but by law, it still generates 3 million dollars.
I heard there
are actually two different types of income
taxes?
That is correct. There is a traditional income tax, where all citizens pay the income tax on all types of income. There is also the earned income tax where retirement income is not taxed.
Exactly what
types of income are exempt from the earned income
tax?
Retirement income from pensions and annuities, interest, ordinary dividends, alimony, capital and other gains, IRA distributions, and rental real estate income (if not from self-employment) are not taxed under an earned income tax system.
Do other school
districts use an income tax to help supplement their
revenue?
Yes. According to the
Ohio Department of Taxation, there are 170 school districts in the State of
Is this the first time the Board of Education has ever
asked voters to approve an income
tax?
No. In November of 1991, the Board of Education asked voters to approve a .75% traditional income tax. That issue failed 3,682 votes opposed to 2,094 in favor. This is the first time the Board of Education has asked voter to approve an earned income tax.
Even though the
last three issues for new property taxes have failed, hasn’t the district been
able to maintain a carryover
balance?
The district has maintained a carryover balance by taking a 360-degree approach to reducing spending. It has taken advantage of attrition and reduced spending by $3,000,000 by not replacing 52 employees (33 teachers) who have left the district over the past two years. These individuals have retired or sought employment elsewhere.
How does
Anthony Wayne Local Schools rank in terms of per pupil
spending?
According to data from the Ohio Department of Education, Anthony Wayne Local Schools currently spends $1,300 less per pupil than the current State average.
How much will I
pay annually if I make…?
$50,000 x .50% = $250.00
$100,000 x .50% = $500.00
How do I pay
the Earned Income Tax?
You employer is required to deduct it from your paycheck each pay period like federal or state income tax.
Will the
district be able to bring back tutoring services if the earned income tax
passes?
Yes. The school district will be able to bring back tutoring services if the earned income tax passes. Tutors could be put back into place soon after January 1, 2009.