Those in noncombat posts outside Ohio now must pay
by Brian Albrecht
If you’re an Ohioan in the military who is deployed to a noncombat post outside Ohio or abroad, you pay state income tax.
If you’re a civilian Ohio resident working out of state or overseas, in most cases you don’t.
That puzzles Jim Ryan, who served 18 years in the Army Reserve, including duty in Desert Storm and Iraq, before retiring last year.
“It just doesn’t make sense,” said Ryan, 41, of Twinsburg. “Just how bad are the finances in Columbus that they have to nickel and dime the guys leaving their families and going off to serve their country?”
The extra money deducted in state taxes from his military pay could’ve helped, he added. “I’ve got three kids, and my wife and I both work,” Ryan said. “Most of the guys I served with were married or changing careers because of the [military] tuition assistance.”
Two bills exempting Ohio military personnel from state income tax when deployed outside the state have been sitting for most of this year in the Senate Ways and Means Economic Development Committee…
House Bill 378, patterned after laws in several other states, exempts service pay from state income tax regardless of where military personnel serve outside Ohio. (A current exemption applies only when serving in a combat zone. The same applies to federal income tax.)
Senate Bill 208 offers a similar exemption, but does not include service members deployed outside the state with dependents still living in Ohio.
The Senate bill’s exclusion would deny the exemption to “many if not most of those personnel who bear the brunt of our war on terror — Ohioans in the Reserves and National Guard who are deployed around the globe,” said Steve Lynch, who is championing the tax-relief cause in Cleveland.
Lynch, a retired Air Force lieutenant colonel who now serves as a government legal assistance attorney for military families, said “Ohio’s military families are the only group of Ohio citizens who are routinely taxed when they don’t live in the state.”
The bills were proposed last year following a newspaper story about Army Staff Sgt. Richard Melvin and his wife, Cindi, who have lived with their three children in Germany for the past 13 years but were billed for school income tax in Ohio because they listed the address of Cindi Melvin’s mother as their state of residence.
The military requires all personnel to select a home state for tax and voting purposes. Some 153 of the 612 school districts in Ohio are supported by income-tax money, in addition to property taxes.
Cindi Melvin’s mother, Bonnie Keith of Pleasantville (southeast of Columbus), said, “It’s just not right. I know it’s their choice to serve their country, but there should be some kind of stipulation. Their kids aren’t getting any benefit from this tax.”
Republican Sen. Ron Amstutz, sponsor of SB 208 and chairman of the Senate Ways and Means and Economic Development Committee, said he still thinks a tax exemption for Ohio’s military personnel is “the right thing to do.”
However, Amstutz said active consideration of the bills probably won’t happen until after the election.
He noted that the biggest obstacle to passage of either bill is the potential cost in lost income-tax revenue, $20 million to $22 million annually. Other estimates have ranged from $17.4 million to $28.5 million, based on an Ohio Department of Taxation estimate that 40,266 Ohioans served on active duty outside the state in 2005.
Ohio collected about $8.6 billion in income-tax revenue last year.
Lynch said the potential lost tax represents a cost to the state of about $500 per service member. “If we’re just going to look at the dollars, basically we’re saying these troops aren’t worth $500 each, which is sad, at best,” he added.
Kate Ryan, sister of former Reservist Jim Ryan and another brother in the National Guard, is a local attorney who assists Lynch on military family cases.
To her, the exemption is “just a matter of fair taxing. These guys aren’t asking for any favors, just the same set of rules that’s applied to civilians.”
She added, “If the state has a budget that’s dependent on the tax income from military personnel, we’re in big trouble.”
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