Earned income tax hike to be placed on ballot
The Uniontown Area School Board Monday voted to place on the May election ballot a question essentially asking voters to raise their earned income tax to provide for property tax relief. At a special meeting Monday, the board authorized a resolution to submit to the Fayette County Election Bureau a referendum question that will ask voters if they favor increasing the district’s earned income tax by an additional .4 percent.
As required by the Taxpayer Relief Act or Act 1, districts across the state are deciding whether to ask voters if they want to see an increase in the earned income tax or a personal income tax in exchange for a property tax reduction.
Voters in all six Fayette County school districts, along with all those across the state, will have the chance to vote on the ballot question this May.
If Uniontown Area School District voters approve the increase, the earned income tax will increase from the district’s current 0.5 to 0.9 percent effective this July.
Wage earners living in the district now pay a 1 percent earned income tax, which benefits the municipality in which they live and the school district. Under the increased rate, the tax will be hiked to 1.4 percent.
The funds generated from the increased rate will be used by the school district to reduce property taxes on residential properties that have qualified for the homestead/farmstead exclusion through the Fayette County Assessment Office.
Every property that qualifies will see a $185.32 property tax reduction.
According to district Business Manager Floyd Geho, a wage earner with a $46,500 annual salary is at the break-even point for potential savings. That wage earner would pay about $180 more in earned income tax under the increased rate, making for savings of about $5.
As wages increase, the potential for savings is reduced, said Geho. A worker earning over $46,500 could end up paying more in earned income tax without receiving a property tax reduction, according to school board member Bill Rittenhouse.
Those who now do not pay the earned income tax due, for example, to retirement, but own their home would reap the most savings, said Geho.
“It’s not a win-win for everybody,” Geho said. “People need to know what they are voting on. The wage earner is supporting this tax shift. There’s no state money coming into this.”
If the taxpayers vote the measure down, there will be no change in the district’s current taxing structure, according to district solicitor Michael Brungo.
If there is no change, seniors who own their home will still benefit by receiving a property tax reduction through Gov. Ed Rendell’s Property Tax and Rent Rebate Program. They would receive additional property tax relief if a tax shift were approved in the school district in which they live.
As part of its resolution, the board announced its support of its local tax study commission, which recommended earlier this year not to raise the earned income tax or create a personal income tax. However, the school boards had to choose some type of increase as part of Act 1 requirements.