Omaha's controversial plan to tax people who commute into the city for work will be challenged in court.
A group of business and government leaders from surrounding communities announced the legal action at a news conference Wednesday.
Attorney William McGinn of Council Bluffs, who is also licensed to practice law in Nebraska, plans on filing an injunction within the next week to stop the fee from taking effect. "The questions that we are sifting through right now are constitutional issues as far as taxation," he said, "people paying tax and in exchange receiving no benefit, no representation."
McGinn also believes Omaha is in violation of state statute by allowing paycheck deductions to pay the $50 fee.
"The city doesn’t think that’s accurate," said Omaha's Deputy City Attorney Tom Mumgaard. "We think that state law authorizes the city to require this kind of deduction, but the city hasn’t required the deduction. They’ve simply authorized a deduction."
He said employers have several options. "They can deduct it from the paycheck with or without the employee's permission, or they can ask the employee to pay it directly with a check to the employer, or they can ask the employee to go down to city hall and pay it directly with a check and bring back a receipt, or they can pay it on behalf of the employee."
Wheel Tax Coalition members feel they already pay their fair share to the Big O. "The fuel tax," said Missouri Valley Mayor Clint Sargent. "They benefit through sales taxes which are an elective tax that people will choose to pay by being there. This is a tax that I feel is forced upon them."
Sargent was joined by Council Bluffs City Councilwoman Melissa Head and Bellevue City Councilwoman Carol Blood among several others.
McGinn said, "This is not something that the city of Council Bluffs, the city of Missouri Valley or the city of Bellevue is taking an official stance on. These are people who happen to be public officials, and they’re bringing their skills to an issue they feel personally attached to."
Blood added, "We have stayed unified in our efforts because we believe this tax is bad for business. We believe that this tax discriminates. We believe that this tax affects many service employees who already live paycheck to paycheck and don’t have the education or skills to work elsewhere."
The tax came into being earlier in the year as the city explored ways to find more revenue. The money collected from out-of-towners who work within city limits is expected to generate $2.8 million for Omaha road maintenance.
The plan, passed by the city council and signed by Mayor Jim Suttle, is intended to be a counterpart to the wheel tax already paid by people who live inside the city limits of Omaha.
Rick Erixson of Union, Nebraska, stands behind the Wheel Tax Coalition. He takes Highway 75 all the way to his job at a steel manufacturing company in North Omaha, without even driving on city streets.
Not only does he think the tax is unfair, he thinks it's an undue burden on people in this tough economy. "Personally, 50 dollars isn't that big a deal," he said. "Some of the people that I work with, it is a big deal."
Erixson is also part of Boycott Omaha which launched in September. He said the 87-member strong group has already made a financial impact on the city, by doing business elsewhere.
"We have diverted over $4.5 million since October 4th when we started recording it," said Erixson. October 1st is when the new 2.5% restaurant tax went into effect within Omaha city limits.
Erixson attributes his figure to from receipts and other information sent to their website, boycottomaha.com.
The Wheel Tax Coalition had its own website up and running as of Wednesday afternoon. They urge people to visit wheeltaxcoalition.com to learn more about their efforts or to get in touch with the group to participate in the litigation.
"We certainly understand the displeasure of some people of having to pay something they’ve never had to pay before," said Mumgaard. "The city council decided this was a fair way to raise revenue to maintain the streets. That’s really all we’re talking about is money to maintain the streets, and those are streets that everybody drives on no matter where they live."