Local Income Taxes

December 10, 1958

Report Outline
Push Toward Municipal Income Levies
Municipal Income Taxes in Operation
Future of the Municipal Income Tax
Special Focus

Push Toward Municipal Income Levies

Laboring under an ever-increasing burden of expenditure and debt, many American cities are now looking to the local income tax as a promising avenue of relief. While such taxes, variously known as earnings, wage or payroll taxes, are currently in use in only eight of the country's 41 largest cities, they are being considered for earlier or later adoption in many others, large and small. One authority in the field has described the tax on income as potentially “one of the most important local taxes of the future.”

City finance officers take a more favorable view of the municipal income tax than do the voters. Recent referenda in Cleveland, Denver and Kansas City have all gone against the tax. Cleveland voters agreed to accept an increase in the property tax in preference to an income levy. In Denver, after an income tax proposal had misfired at the polls in 1957, the city council enacted a modified plan of its own devising. And when that plan was declared unconstitutional by the Colorado supreme court, Denver officials said they might have to cut down on the city's traditional display of Christmas lights and make sharp reductions in non-essential services. Talk of an income tax then revived, and new efforts to adopt one now seem likely.

In New York City, where local income and payroll taxes have been urged off and on for nearly 30 years, rumors that the city administration was about to introduce a payroll tax became rife after publication last July of a report by the New York Metropolitan Regional Study detailing the “flight of wages” from the central city to the suburbs. Mayor Robert F. Wagner denied the rumors, Aug. 18, going so far as to recommend that Democrats in the state legislature work for withdrawal of the city's authority to levy such a tax. Mayor Wagner's statement seemed designed to quiet suburban fears, and to eliminate an issue that might have been exploited to his party's disadvantage in the 1958 campaign. Douglas Powell, planning director of New York's Regional Plan Association, said after the election that city income taxes were favored by the experts, but that for political reasons mayors did not like to talk about them.

ISSUE TRACKER for Related Reports
State and Local Taxes
May 04, 1966  Local Income Taxes and Revenue Needs
Feb. 13, 1963  State and Local Taxation
Dec. 10, 1958  Local Income Taxes
Aug. 16, 1941  State-Local Finance in the War Emergency
Sep. 28, 1937  State Control of Local Finance
Jul. 09, 1932  New Sources of State and Local Revenues
Sep. 16, 1930  Rising Cost of State and Local Government
Nov. 24, 1926  Increasing State and Local Taxation
Jul. 20, 1925  Problems of State and Local Taxation
State and Local Taxes
State, Local, and Intergovernmental Relations