Thursday, June 28, 2012

Easton “Commuter Tax” Formally Introduced

By Christina Georgiou

A proposal to impose Earned Income Tax on those who work but do not live in the City of Easton was officially introduced at the regular city council meeting Wednesday evening.

The 0.75 percent tax, if approved by council members, is earmarked to help the city pay a shortfall in its pension plan for city workers and will be implemented beginning in 2013 if council members approve the measure, slated to be voted on in four weeks, after the city properly advertises the potential change in law as legally required.

City resident currently pay 1.75 percent EIT.

It seems extremely likely the bill will be passed based on past comments from city council members and Mayor Sal Panto, who said the city will fall short by $1.7 million if it does not raise the EIT. The tax will raise the majority of the needed amount, he said.

“The number is about $1.35 (million), of which we have a $1.7 (million) need,” Panto said.

The measure is allowed by state law for cities that fall into the “distressed” category. Easton is considered to be “moderately distressed” and the law allows for it to raise the EIT to pay for it's pension shortfall.

The money raised by the tax increase can only be used for that purpose, city officials said, and if the city's finances improve the tax may be lowered or dropped altogether, though Easton is under no obligation to do so.

Councilman Roger Ruggles questioned how the city will enforce collections.

Easton City Finance Director Chris Heagele said collection costs, estimated at $20,000, will be taken from the city's general fund.

“It's really just an accounting issue,” Heagele said. “The law ia unclear, and some (municipalities) do it one way, and others do it another way...It would only matter if we collect more than we projected. Which would be terrific, but if that were the case, we wouldn't be distressed.”

If the law is passed, commuters will begin paying Earned Income Tax (EIT) to the city beginning next year, starting on January 1.

The money will be withheld by employers, who will take the highest amount the employee is likely to owe between the City of Easton and their home municipality's taxing rate, with a maximum possible rate of 1.75 percent. So if a worker's community of residence has an EIT rate of say, 1.4 percent, 1.75 percent will be withheld, but Easton will only get 0.3 percent, or the difference.

City of Easton workers will also pay 1.75 percent EIT if the law is passed.

1 comment:

  1. If you are a city employee receiving a taxpayer funded pension, you should be paying a commuter tax if you don't live in Easton. such a tax is fair and reasonable. If you don't want to pay the commuter tax, find a job (and taxpayer funded benefits) in your own community.

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