By Maggie Thurber | Special to Ohio Watchdog
It was only a matter of time before local politicians figured out a way to get even more money from the newly established casinos in Ohio.
It’s become a standard practice for municipalities to tax the income of their residents, including income earned from gambling. Many also tax individuals who work within the jurisdiction, regardless of where they live, since the income is earned and paid inside the city limits. But imposing an income tax on tourists who come to a city to gamble is new for Ohio.
Columbus recently approved an ordinance to impose its local income tax on any non-resident who hits it big at the new Hollywood Casino. The measure, which will be retroactive to June 1, was passed unanimously.
The Toledo Council has a pending ordinance that will allow the city to impose its income tax on “lottery, gambling winnings, lotteries, raffles, as well as the fair market value of bonds, cars, houses, and other noncash prizes” won or earned by non-residents within the city limits. And yes, this would include various raffles and bingo.
Both ordinances allow only “professional gamblers,” as defined by the Internal Revenue Service, to deduct losses before calculating the amount of income tax owed.
The summary of the Toledo legislation states the taxation is “desirable, because doing so increases General Fund revenue.” In other words, imposing new or additional taxes is good because it increases the amount of money government has.
But will it really give local governments more money — or will the new taxes be offset by people who will make other choices?
If you’re planning a trip to a casino, will you choose a location where less of your money is taken in taxes or do gamblers not pay attention to such things?
Will gamblers be surprised — and then angry — when they cash in their chips and find local income taxes deducted from their winnings?
Will that be their last trip to that casino?
Is this how we want tourists to remember their visit?
Are these questions — and other potential unexpected consequences — even discussed by politicians as they make their decision?
Or do the dollar signs get in the way?
Tax policy is never simple, especially when the costs to impose, collect, report and monitor the taxation are rarely included in the process. Looking to casinos as a solution to budgetary woes hasn’t helped Detroit, and it won’t be the solution for Ohio cities either.
But it’s easy to conclude that taxing the income of non-residents is good, because it gives the cities more money, especially when those non-residents don’t get to vote.