HARRISBURG – A bill to end Philadelphia’s take-all tax practice has been introduced to help suburban communities whose residents commute to the city for work, announced Rep. Joe Hogan (R-Bucks), who co-sponsored the measure.
“The Sterling Act, for many years, has burdened the surrounding communities of Philadelphia with its unfair taxing procedure. Our employees are commuting into the city, but no funds are returned to their residing communities at the end of the tax season,” Hogan said. “We are losing out on significant revenue which is rightfully ours. That is why I have co-sponsored a bill to repeal it.”
The Sterling Act, enacted in 1932 to assist Philadelphia following the Depression, is Pennsylvania’s first local income tax enabling legislation and grants the City of Philadelphia broad taxing authority.
Under the act, non-residents who commute to work in Philadelphia must pay the Philadelphia Wage Tax. However, unlike the imposition of local taxes in other taxing jurisdictions, none of the non-resident City Wage Tax is returned to the non-resident’s home government. As of July 2020, the city raised this tax on commuters, but not on those who live in Philadelphia. This is the highest City Wage Tax in the country.
As a result of this disparity of tax practice, surrounding suburban areas are losing significant tax revenue to support their police, fire, EMS and schools from their residents who work in Philadelphia.
In Bucks County alone, local governments lost about $8.6 million in revenue for 2017.
This new legislation would correct this unfair and long overdue issue by amending the Sterling Act to require Philadelphia to reimburse the surrounding taxing jurisdictions that impose an Earned Income Tax at a rate equivalent to that which would have been collected from commuting workers of their respective boroughs and townships.
“I look forward to advancing this issue and redirecting the appropriate and fair amount of funding back to the suburbs,” Hogan added.
The bill awaits assignment to a state House committee for consideration.
Representative Joe Hogan
142nd Legislative District
Pennsylvania House of Representatives
Media Contact: Rene Morrow