Wednesday, August 1, 2012

A local tax

In the second half of Monday night's meeting, the West Marlborough Township supervisors enacted a 0.5% earned-income tax on its residents that will take effect starting this October. That's $50 per $10,000 of your salary.
The board said the township needs the additional income source to offset the double-whammy that has depleted its coffers: a drop in income from real-estate transfer taxes and an increase in its legal expenses. They said the tax will generate about $100,000 a year, and the cost of collecting it will be minimal.
Speaker after speaker stood up and vigorously opposed the tax, arguing that it would be a hardship on working people, questioning the township's estimates about how much money it would bring in, asking whether alternative funding sources (such as increased fees) had been considered. Several said they'd even rather see their property taxes increase than have an earned-income tax imposed.
Despite the opposition, the supervisors unanimously approved the tax. In response to several residents' concerns that the tax was "a long-term solution for a short-term problem," however, they agreed to review the need for it annually as part of the budgeting process.

(I should disclose that I was one of the residents who stood up and opposed the tax. I'm going to get clobbered by it because I both live and work in the township.)
I've covered some hot-tempered municipal meetings in my day, and this one was not. Yes, feelings ran high; but people were calm, respectful, thoughtful, and eloquent (myself sadly excluded on that last point).
Who will pay this new tax? People who live and work in West Marlborough or who live in West Marlborough and work in a community that doesn't have an earned income tax. Many residents already pay the tax at their workplace. Those residents won't see a tax increase; rather, the money they already pay will come back to West Marlborough Township rather than staying in the municipality where they work.
Retired people and those with significant investment income get a break, as they are not considered to be receiving "earned" income.
Also, the current $10 per capita tax will be eliminated.
Just for comparison, here are the real-estate and the earned income tax rates in neighboring townships:

                                       Real Estate (mills)            Earned Income Tax (%)
East Fallowfield                      0                                    0.50
Highland                               2.3                                   1.00
Londonderry                         0                                     0.75
London Grove                     1.24                                 0.75
New Garden                        0.75                                 0.625
Kennett Twp.                       0.40                                 0.75
East Marlborough                1.43                                  0.0
Newlin                                 0.75                                 0.50
West Marlborough               1.70                                  0.5 

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