Tiffin's finance committee plans to recommend City Council adopt a revision to the tax code that would remedy a discrepancy in the state tax law.
Members of the committee, chaired by Mark Hayes, councilman-at-large, met Monday night to discuss revising the city tax code to allow self-employed residents to deduct from taxable income the cost of health insurance premiums and a health savings account. This is the same tax benefit already allowed for more than three years for people traditionally employed.
Tiffin does not tax money spent by traditional employees on health care insurance premiums, but there is no provision in city ordinances for the deduction if a person is self-employed. If approved by city council, the revision would allow the city to change that discrepancy.
Mayor Jim Boroff said the impact to the city would not be huge.
"What's fair is fair," Boroff said.
The second part of the legislation involves health savings accounts.
Health savings accounts were created by a Medicare bill signed by President Bush in 2003. It allows individuals to contribute up to $2,850 for future medical and health expenses on a tax-free basis; a family can contribute up to $5,650.
Like health insurance premiums, these contributions are generally not taxed for those who are employed by a business or company.
State legislators approved a bill last year giving cities the option of revising their tax codes to allow the deduction.
House Bill 24 was introduced by State Rep. Jeff Wagner, R-Sycamore, on behalf of self-employed Tiffin resident Michelle Kramer.
Kramer, who is a technical writer, contacted Wagner after she contacted officials in Tiffin and other Ohio cities and found municipalities could not offer the deduction to self-employed residents due to state law.
"I talked to other cities. They all said it's not fair, but we can't do anything about it," Kramer said.
She testified before the House Ways and Means Committee last year about the difference in taxation created by state legislation passed in 2004. She testified her family spent $8,000 in 2005 for these expenses and, if she had been allowed the deduction, she could have saved $140 in taxes.
Hayes will ask City Law Director Brent Howard to draft a proposed ordinance that could be introduced at Monday night's city council meeting. If approved, Kramer said, it could be the first in Ohio.
