The intangibles tax was discussed at length Monday at the North Newton City Commission worksession meeting. North Newton is one of only a few cities in the state that charge the tax, and they may continue to do so. Commissioners discussed the tax and other items as they talked about needs in general.
Other items included water and sewer improvements on Ivy Street as well as on and around the Bethel College campus.
The intangible tax is a two-percent tax on interest and dividend income, and it is up to cities to decide if they want to asseess the tax. There is not a lot of enforcement, and so some people don't pay it.
City Manager John TOrline said the city collected about $50,000 in 2009, and that amount fell to $35,000 in 2012. He said if the tax was eliminated the city would have to raise taxes by 3.5 mills to make up the difference.
Opponents in general say the tax amounts to double taxation because people have already paid taxes on their earnings. Supporters say it is a tax on wealthier people, who generally can afford to pay. People who make less than $20,000 per year have an exemption on $5,000 of this type of income.
Torline said he was not sure why the income from the tax has declined in North Newton, but he said he believes it works for their city.
North Newton resident Omar Voran spoke against the tax. He said he thinks people resent it and resist paying it as well. He also said it is hard to actually pay, as you have to find the forms and take them to the county courthouse instead of just filing it with your normal taxes.
"You can't file it electronically, and the form itself is not easy to use," he said. "It's not easy to even get a form."
Torline agreed that it is a difficult tax to enforce, and the city does not know who is paying and who is not.
The tax was once collected by Newton but was rescinced a few years ago. If they did away with the tax and raised property taxes more poeple would be paying the tax, others pointed out.
The city may start trying to better communicate with people that they should be paying the tax is they have interest income or dividend income.
North Newton has very little business and industry, and its tax base is limited, commissioners said.
Commissioners also discussed working on signs welcoming people to North Newton.