Local Municipalities Consider Reclaiming Philadelphia’s Commuter Wage Tax

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Several local municipalities have brought up a possibility of revisiting the Sterling Act, the Great Depression measure, which to this day allows the city of Philadelphia to collect a wage tax from commuters, writes Dan Sokil for the Lansdale Reporter.

Philadelphia is the only municipality in Pennsylvania that is still allowed to collect earned income revenue from people living in the city’s suburbs through a wage tax. As a result, Hatfield municipality is considering reclaiming the revenue gathered through the 3.4828 percent earned income tax rate imposed on suburban residents working in Philadelphia.

The new motion would split one percent of that revenue between the municipality and the local school district which could generate close to $210,000 in revenue for Hatfield, and the equivalent amount for the North Penn School District.

Aaron Bibro, Hatfield Township Manager, said one percent is sent back to Hatfield no matter where the town’s residents work, except when it comes to Philadelphia.

“It’s the only municipality with the ability to tax nonresidents,” he noted.

Hatfield is not the only municipality reviewing the tax, with Telford, Lower Salford and Towamencin Townships already voting in support of bringing back the revenue.

Hatfield’s board started discussions on the Sterling Act at its May 11 meeting and voted to support the recovery of the tax money on May 25. Lansdale Borough Council had similar talks on May 18, but has tabled any action until more information is gathered on the potential impact to residents.

“What we could inadvertently end up doing is putting an unintended tax increase on our residents that work and commute to Philadelphia,” said Denton Burnell, Lansdale Borough Council President.

Read more about the proposals in the Lansdale Reporter by clicking here.

Top photo credit: Personal Income Taxes Ver3 via photopin (license)

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