Thompson v. City of Cincinnati

• Decision Date: 23 June 1965
• Docket Number: No. 38919,38919
• Citation: 31 O.O.2d 563,2 Ohio St.2d 292,208 N.E.2d 747
• Parties: , 31 O.O.2d 563 THOMPSON, Appellee, v. CITY OF CINCINNATI, Appellee, City of Loveland, Appellant, et al.
• Court: Ohio Supreme Court

Page 292

2 Ohio St.2d 292

208 N.E.2d 747, 31 O.O.2d 563

THOMPSON, Appellee, v. CITY OF CINCINNATI, Appellee, City of Loveland, Appellant, et al.

No. 38919.

Supreme Court of Ohio.

June 23, 1965.

Syllabus by the Court

1. A municipal corporation may levy a tex on the wages resulting from work and labor performed within its boundaries by a nonresident of that municipal corporation. (Angell v. City of Toledo, 153 Ohio St. 179, 91 N.E.2d 250, approved and followed.)

2. Municipal corporation 'A' may levy a tax on the wages resulting from work and labor performed in municipal corporation 'B' by a resident of municipal corporation 'A.'

3. No single municipal corporation may levy a tax on income at a greater rate than one per cent without first obtaining prior voter approval. No municipal corporation is deprived of its power to levy a tax on income by reason of any action taken by another municipal corporation. Section 718.01, Revised Code, construed.

4. A resident of one municipal corporation who receives wages as a result of work and labor performed within another municipal corporation may be lawfully taxed on such wages by both municipal corporations. Sections 3 and 7, Article XVIII of the Ohio Constitution.

Jack Thompson, plaintiff, appellee herein, brought this action in the Court of Common Pleas of Hamilton County, wherein he seeks a declaratory judgment as to his rights and duties in respect to the payment of municipal income taxes to the city of Cincinnati, defendant-appellee herein, and defendant city of Loveland, appellant herein, by virtue of income tax ordinances enacted and enforced by both cities against plaintiff.

Plaintiff, Thompson, is a resident of the city of Loveland. He is employed by the Cincinnati Union Terminal Company in the city of Cincinnati and, as a result of work and labor performed within the boundaries of Cincinnati, Ohio, receives income from the Cincinnati Union Terminal Company. During the period of January 1, 1963, to December 1, 1963, plaintiff has been taxed at the rate of one per cent upon his wages under both the city of Cincinnati income tax ordinance (No. 427-1961) and the city of Loveland income tax ordinance (No. 1962-33), for a total of two per cent.

The Common Pleas Court of Hamilton County held that the defendant city of Cincinnati had the right to collect an income tax of one per cent upon the wages of plaintiff, and that defendant city of Loveland had no authority to levy or collect from plaintiff any income tax upon his salary earned by him while working in the city of Cincinnati.

Upon appeal to the Court of Appeals for Hamilton County, the judgment of the trial court was affirmed.

The cause is now before this court upon the allowance of a motion of appellant to certify the record.

Douglas & Carlier and Flach Douglas, Milford, for plaintiff-appellee.

William A. McClain, City Sol., and William H. Brewe, Cincinnati, for defendant-appellee city of Cincinnati.

Vernon Stiver, Director of Law, for appellant.

Taft, Stettinius & Hollister and John W. Hudson, Cincinnati, for Cincinnati Union Terminal Co.

HERBERT, Judge.

Although appellant, the city of Loveland, has discussed and alluded to numerous questions in its brief, the sole question presented by the record in its behalf is as follows: Can the city of Loveland levy an income tax on the wages of a resident, where such wages result from employment within another municipality and are subject to an income tax in that other municipality?

This court, through constitutional provisions and past decisions, is committed to certain legal principles in regards to the authority vested in municipalities to enact income taxes. Municipalities have the right to exercise all powers of local self-government and may adopt and enforce such local regulations that are not in conflict with the general law. Sections 3 and 7, Article XVIII, Ohio Constitution. Included within the above grant of authority is the power of taxation. See State ex rel. Zielonka, City Solr. v. Carrel, Aud., 99 Ohio St. 220, 124 N.E. 134.

The General Assembly may pass laws providing for the taxation of incomes. Sections 8 and 9, Article XII, Ohio Constitution. However, until the state enters the field of income taxation as authorized by the Ohio Constitution, municipalities have within their general power of taxation the power to tax incomes. See Angell v. City of Toledo, 153 Ohio St. 179, 91 N.E.2d 250, approved and followed in McConnell v. City of Columbus (1961), 172 Ohio St. 95, 173 N.E.2d 760.

The power of a municipality to tax incomes is limited by certain constitutional provisions. The General Assembly may pass laws limiting the power of municipalities 'to lexy taxes * * * for local purposes' Section 13, Article XVIII, Ohio Constitution, and may 'restrict their power of taxation * * * so as to prevent the abuse of such power' Section 6, Article XIII, Ohio Constitution.

The above constitutional provisions and judicial precedents clearly indicate that a municipality has the power to tax incomes subject to all lawful restraints imposed by the General Assembly.

In 1957, the General Assembly exercised its constitutional authority to regulate municipal income taxes. See Chapter 718, Revised Code. Therein certain restrictions were placed upon the power of a municipality to tax incomes.

Pertinent to the question raised on appellant's behalf is the following provision:

'No municipal corporation shall levy a tax on income at a rate in excess of one per cent without having obtained the approval of such excess by at least fifty-five per cent of the electors of such municipality voting on the question at a general election or sixty per cent at a special or primary election.' Section 718.01, Revised Code.

The above restriction provides in plain and unambiguous language that no single municipality may tax incomes at a greater rate than one per cent without prior voter approval. It does not provide that the city of Loveland is deprived of its power to tax incomes of its residents where such residents are also subject to an income tax by another municipality. Further, the above restriction cannot be construed to mean that the General Assembly sought to limit the total municipal income tax owed by any one individual to one per cent. The language used simply will not support such a construction.

In its present status, the law provides that each municipality has a constitutional right to exercise the powers of local self-government, including the power to tax incomes, and that this power is restricted only by the General Assembly and not by the actions of other municipalities.

Accordingly, the trial court erred in determining that only one of the municipalities in this cause had the right to collect an income tax of one per cent, and its judgment must be reversed.

There remains for consideration the claim of the plaintiff that to impose two municipal income taxes upon his wages is 'discriminatory,' a 'violation of basic taxing principles,' and 'contrary to the manifest legislative intent of only taxing wages at one per cent as set forth in Ohio Rev. Code, Section 718.01.'

As we have previously found the legislative intent to be otherwise, plaintiff's argument on this point is not well taken. We may thus turn to his other arguments.

Plaintiff, in support of his 'discrimination' argument, relies upon Youngstown Sheet & Tube Co. v. City of Youngstown (1951), 91 Ohio App. 431, 108 N.E.2d 571. Therein a municipal income tax ordinance which provided one rate for individuals and a substantially higher rate for corporations was held unconstitutional as contrary to the equal protection of the laws under Section 2, Article I of the Ohio Constitution, and under the Fourteenth Amendment to the Constitution of the United States.

The Youngstown decision preceded the enactment of Section 718.01, Revised Code, which provides, in pertinent part, as follows:

'No municipal corporation with respect to that income which it may tax shall tax such income at other than a uniform rate.'

The evils present in the Youngstown case have been effectively prohibited by the General Assembly. There is also no claim in the instant case that the tax rate of either municipality is not uniform.

Plaintiff's 'discrimination' argument is directed towards the fact that residents of the city of Loveland who work in the city of Cincinnati are subject to two taxes whereas residents of the city of Cincinnati who work in the city of Loveland are subject to but one tax. This result inures from the fact that the city of Cincinnati allows a tax...