Black Eye On Westerville- Part 1

Many of the thinkers reading this might ask the questions a journalist is supposed to be trained to ask, though most don’t anymore because it’s more satisfying to try to steer the events than to just report them. So what questions do I mean? They are: who?; what?; where?; when?; why?; how?

First things first. Who. The “who” is the City of Westerville Ohio, a suburb of Columbus. “What” it’s all about is a proposed 60% city income tax increase. Yes, that’s what I said. A 60% income tax increase. From a base rate of 1.25% to 2%. The “when” is this November. Normally Westerville likes to run these kind of elections during the off-season primary times or, better yet, special elections when far fewer people vote and often only hear about the issue when they notice there’s less money in their paychecks. That’s exactly what Westerville did in 1998. It held a special election in August 1998, when almost no one was paying attention, for the so-called PROS 2000 tax increase. That one was less audacious, being only a 25% tax increase.

That increase was used for the purposes of buying privately owned land, removing that land from the tax pool, and turning it into park land, eliminating the revenue it formerly generated. The money was also used to build a grossly overpriced white elephant “community center” which is really a fancy subsidized health club. Full memberships (and someone has yet to explain satisfactorily to this author why memberships are required to a “community-owned” facility in the first place) to Westerville’s Community Center are far too pricey for the average Westerville resident, who must pay on a “per-use” basis to use a facility he was forced to provide tax dollars to build and operate via the tyranny of the majority of voters in an election that had an exceptionally small turnout. And some facilities in the community-owned building are only available to members. Like the weight room, for instance.

There’s a name for a system of taxation where a group can force another to provide a portion of the fruits of their labor to subsidize its own lifestyle. It’s called tax slavery. And it’s the result of a “majority” of poorly informed citizens tyrannizing the minority. This is a perfect example of democracy (as opposed to a republican government limited by law) in action. And what about private businesses that must compete in a taxpayer-subsidized market? Ask the owners of the Westerville Athletic Club (WAC) which was driven out of business because it could not compete in this kind of market. The city made sure WAC couldn’t compete by refusing them a tax abatement (not enough non-resident jobs promised, you see) which made the continued operation of the private club untenable. But more on this travesty in a later part of the series.

The “where” is a formerly small and quiet suburban college town northeast of Columbus Ohio. I say “formerly” because the city fathers (and mothers) decided that Westerville needed to “grow and change with the times” and adopted city planning on an Italian model. The model in question has received high praise in the past from officials in the federal government who have employed something quite similar for some time and has been adopted by the vast majority of cities in the United States. In that model, government and business form “partnerships” supposedly for the overall benefit of the residents but, in reality, shifting the tax burden from the large businesses to the employees that those large businesses bring into the city. Those non-residents are then forced to pay city income tax to cover the costs of “necessary services” while the large businesses who hold property, which is worth millions of dollars per year in property taxes, are given large tax abatements of 50-100% for given periods, often 10 or 20 years. At the end of these terms the large businesses are given the opportunity to up the ante with more employees. Faced with the loss of subsidy, many simply leave the jurisdiction, leaving the city and its former employees holding the bag. By the way, small businesses are not eligible for this arrangement. So the small local businessman is at a huge disadvantage in an economic model where the number of non-resident employees brought in equals proportionally larger revenue to the city and, therefore, 50-100% property tax breaks for large businesses which are often absentee owned. What effect does this have on a city? It says to the small businessman, the one who keeps a downtown area vital, “drop dead, we don’t need you.”

The advantage to the government in this model is that thousands of non-residents are forced to contribute a disproportionate amounts of their labor to the city, yet are not allowed representation or a voice in how the money is spent. Taxation without representation, as the the founding fathers shortened the 17th complaint in the Declaration of Independence. The city that hosts the business only provides a fraction of the services to these non-residents that they do for the businesses and residents, so it is quite a boon for the city government which then, usually, uses the extra revenue to grow government, for the “good” of the residents, of course. The burden of the large remainder of “necessary services” is left mostly to surrounding cities which extract yet more of the fruits of labor from their hapless residents who work in other communities, providing a laughably small “credit” for taxes paid to another jurisdiction. Large businesses pay little or nothing beyond normal fees for the privilege of using the cities service infrastructure, a large percentage of which is necessary precisely because of the large businesses themselves.

This system creates tremendous strain on the infrastructure of small to medium-sized cities and when large subsidized businesses accept the income taxpayer funded tax abatement and subsidy bribes offered by other communities to expand their own taxpayer base, cities which cannot offer competing subsidies are left with large unoccupied tracts of industrial and/or office space ghettos which then require even more taxpayer subsidies to “redevelop” the property, which was more often than not originally developed under taxpayer subsidy. Thus, a vicious incrementally increasing cycle of tax-subsidize-tax-subsidize is created to “keep cities growing.” This is where Westerville now finds itself.

By the way that Italian model has a name. We’re sure you’ve heard of it. It was lauded as the model for the Roosevelt administration policy in its early days, by no less than Woodrow Wilson’s “alter-ego” and Roosevelt operative Col. Edward Mandell House. The Italian model in question is the economic fascism of Benito Mussolini’s Italy of the 1920’s-1940’s.

Now the “why” question. There are dozens of cities in Ohio and probably hundreds or thousands throughout the country who will try to get income tax increases past voters this fall. So why Westerville? Because the author of this series lives there. And it’s easier for the author to get information about the shenanigans of Westerville’s city “leaders” from local newspapers and cable outlets than it would in, say, Resume Speed Ohio’s or some other place’s. And the tactics and vacuous arguments we will chronicle here will be nearly identical to those used in your city. So stay in contact and hopefully you will learn how to refute or combat them.

The “how” question is what this series is all about. How the city will fight its end of the the battle and how Westerville residents who oppose the increase will fight the battle. Keep watching this space.

Series NavigationBlack Eye On Westerville- The “Tax Fairness” Argument