4-14-04

Sherwood Village Council on Wednesday took its first official step toward initiating a municipal income tax.

Council members gave first reading to an ordinance to enact a 1 percent income tax on wages, salaries, commissions and other compensation earned on and after July 1, 2004 when the new proposed tax would go into effect. As proposed, exempt from the income tax would be pensions, Social Security, alimony, any personal earnings of those younger than 18 years of age, unemployment insurance benefits, disability benefits, pay or allowances of active members of the armed forces, compensation for personal injuries or death and interest, dividends and other revenue from intangible property.

  The proposed ordinance also states "each taxpayer shall, whether or not a tax be due thereon, make and file a return on or before April 30" of 2005 and every April 30 thereafter. According to the legislation, the tax would be collected for the village by the Regional Income Tax Agency (RITA). The village would also need to designate an administrator to help administer and enforce the income tax along with RITA.

Village officials said they do not know for sure how much revenue the income tax will generate. Village solicitor Steve Hubbard suggested to council that it have a first reading of the ordinance instead of passing it as an emergency. "Let it be in the paper and so forth so citizens can have a month to comment," Hubbard said. "You can pass it in May by waiving the last two readings."

Hubbard also warned the village may want to include lottery winnings as taxable income in the ordinance. "The way the ordinance is written now, it taxes earned income," he said. "Lottery winnings are not earned income, but you can tax lottery winnings if you add it. Today, with the Powerball and how close we are to Michigan, that might be something you want to consider." Councilman Mike Walker asked at what point lottery winnings would be taxed.

 “No winnings are reportable under $600," Hubbard said, adding that if someone wins more than that he or she will receive a 1099 form from the federal government.

Walker also asked if the earned income of a person older than 65 was taxed, and Hubbard responded that the income would be taxable. "If I'm working at a job past age 65 it's probably not because I want to, but ,because I have to," Walker said. "Is it possible to set an income level, say $10,000 at the age of 65? Because if they're working it's because they need to. I don't know if that's ever done or not." Hubbard said he didn't know if it was possible to set an income level like that.

Councilman Scott Rohrs said he thought not many people fit into that category. "It's not really that much," Rohrs said. "One percent won't make them quit their job."

Hubbard said council could think about these issues and get more information. "You can move to amend this (ordinance) before the second and third readings," Hubbard said, adding that Ottawa, for example, has made amendments to its income tax ordinance from time to time.

Council also heard the first reading of an ordinance to create the position of a village administrator to be paid $5,000 a year. According to the ordinance, the appointment of the village administrator by the mayor will have to be confirmed by council. Once that has happened, the board public affairs would be abolished.

 In other business, council:

-heard a farmer's market registration form has been prepared.

 

- heard 14 letters have been mailed to residents who are in violation of the village nuisance laws.

 

-heard the annual village cleanup day is from 8 a.m.- 12 p.m. May 15 in the village hall parking lot. No tires or batteries will be accepted.

 

-also heard it is against the law to have open burning unless it is for recreational purposes.

 

-will try to obtain community development block grant monies for resurfacing and repaving Wilmont Street and the east end of Maple Street.

 

-heard "no weapons allowed" signs are needed for all three parks and the village garage, fire department and all county buildings.

 

-heard the zoning board will meet at 7 p.m. Wednesday in the village hall.

 

-asked to look at a copy of a five-year extended warranty contract on the police car for $1,780 the village is considering.