Study: Columbus' Income Tax Reliance Could Heighten COVID-19 Economic Pain

Apr 6, 2020

A new study found Columbus relies more heavily on income tax revenue than almost any other city in America. That could mean it’s among the first to experience economic strain due to COVID-19.

The Brookings Institute surveyed 139 American cities to see what share of their revenue comes from elastic sources, like income and sales tax, that will react quickly in a economic downturn. Columbus topped their list.

However, City Auditor Megan Kilgore says the city is OK for now, because most employers are finding ways to cope with the coronavirus pandemic.

“You know if you look at our top employers in Columbus, they are education, banking services, financial services, insurance, and those industries are able to largely work from home,” Kilgore says.

She explains they're routinely reaching out to Columbus' largest employers to see how they're managing the crisis.

"We have applied a vulnerability score to each of these main employers," she said. "As of this week, a little over 50-56% of those main employers are working largely the same, they've switched their operations to remote strategies, and they're largely working the same."

Four Ohio cities make the top 10 in Brookings’ survey, likely because Ohio tax policy gives municipalities greater freedom to generate revenue through income taxes. Study authors Michael Pagano, an urban planning scholar, and Christina McFarland, research director with the National League of Cities, note reliance on income tax is rare for cities.

“Only a few cities—approximately one in 10—rely most on income or wage taxes,” they write.

Although Kilgore believes the city is on a good footing, COVID-19's impact will be felt.

"It is very important to acknowledge we will have revenue loss,” she says. “Until we know spread and duration it is impossible to forecast what that revenue loss will be."