The response from city officials (August 21st issue) to my article in the Lakewood Observer on August 7th about collecting income taxes did not include an answer to my question of why we don’t ask landlords for tenant name information.  In addition, some of the methods to identify taxpayers that they claim are being used today have several flaws.  Let us examine these methods and flaws.

 

First, I too received my information from the same source as the authors.  I will not waste your time disputing or manipulating numbers and what they “truly” mean.  You can look up the information yourself and make your own judgment.  And I agree with them in their statements about withholding taxes, the impact they have on a community and the lack of major employers in the city of Lakewood.  And I also agree with their statement “the City of Lakewood income taxes depend on its RESIDENTS”.  But let us not forget that renters are residents too.

 

Now for the current methods utilized by th city in identifying the taxpayers:

1) An annual comparison of the Lakewood taxpayer database to the state of Ohio.

This method fails to identify those renters moving to Lakewood from out of state.  The last 4 tenants I rented to came from outside the state of Ohio.  And none of them work in Lakewood.  In addition, its usefulness is negatively impacted by those failing to file state income tax returns.

2) Cross checking the Lakewood Division of Water customer database.

In the large majority of rental properties in Lakewood, the landlord pays the water bill and the water bill is in the landlords name.  This method is almost useless.

3) Comparisons with AT & T new resident phone listing.

This method fails to identify all those renters whose only phone is a “cell phone”.  All seven of my tenants use cell phones and NONE have an account with AT & T and NONE have any other phone in their home.

4) Anonymous tips.

Ok, I won’t hold my breath on that one.  My guess is there are very few of those being made. 

5) Employer reconciliations and audits.

Another useful method, but still falls way short of the goal considering many of these renters do not work in Lakewood.

6) New software just recently put into use “showing every possible location address in the city, as well as rental property tracking capabilities”.

Forgive me if I’m wrong, but don’t we already have this information in the Division of Building and Housing?  Wouldn’t this information be on the same database used to generate the annual occupancy certificate application?  I applaud any technological advances that the city is using to help identify taxpayers, so I’ll assume this software is more of an “operational” rather than “informational” upgrade.

 

The authors also mention how the city of Lakewood has experienced growth in income tax collections.  That is correct, but at a snails pace – based on their stated numbers - 3.3% in 2 years or 1.67% per year (not 4% as stated in their article).  Most of this growth can be attributed to several factors (other than improved identification) including cost of living and merit raises.

 

I do want to give the city credit for recently taking over tax collection (from RITA) and saving the city approximately $300,000 a year (net, after considering the expense of the newly created income tax department). 

 

As for the comment about my analyzing the fiscal responsibility of the city, income taxes are just one part of that.  You’ll hear from me again about other areas of fiscal irresponsibility.

 

I still would like to know why we don’t ask landlords to provide us with taxpayer name information.  As stated in my previous article, it is simple: include a few extra lines on the already-produced annual occupancy certificate application (for landlords), it is inexpensive as we already produce a document, and it is going to be the MOST accurate and inclusive method for identifying renters.  I hope the city at least considers my proposal.  Let’s look at all the other opportunities we have to increase tax collection and revenue generation, such as my suggestion, before increasing tax rates in an already high tax environment.