June 12, 2017
Senate Local Government Committee
Re: Support of Senate Bill 653
On behalf of the 4,500 elected officials who govern the commonwealth’s public school districts, we are writing to request your support of Senate Bill 653, sponsored by Senator Browne. This legislation continues the success of Act 32 which simplified the administration and collection of earned income tax in Pennsylvania. Locally elected officials supported this groundbreaking structural reform in 2008 and support the expansion of this structure to other local taxes.
Act 32 of 2008 has substantially increased earned income tax revenues for school districts and municipalities, eased compliance burdens on employers, and brought our earned income tax collection system into the 21st century. More specifically, the Legislative Budget and Finance Committee recently reported that Act 32 is generating “at least $156.7 million in additional” earned income tax collections for school districts and municipalities annually – all without any raise in tax rates or expansion of the tax base. According to the Pennsylvania Department of Community and Economic Development, Act 32 is “the most significant change to location tax collection law and local government operations in a generation.”
Advocates’ for Act 32 knew then that one significant step affecting only the local earned income tax would be needed to move Pennsylvania local taxation forward. The supporters recognized that if the new system of tax collection was successful further consolidation of local tax collections could be possible and would result in increased revenues and eased reporting burdens on employers and taxpayers. The reality of the system developed in 2012 is that large and technologically sophisticated collectors were hired and ultimately helped create a straight forward collection system. The collecting entities that currently handle earned income tax collections for one or more Counties have sophisticated, proprietary databases populated with readily-accessible information about employers and individuals in the jurisdictions they serve. Those databases are constantly updated using various sources of information such as ongoing employer registrations required under Act 32 and taxpayer detail provided by the Pennsylvania Department of Revenue. These efficiencies cannot be handled effectively by local collectors.
I appreciate your time and attention to these matters. If you have any questions or concerns, please feel free to contact me at (717) 506-2450 x3337.
John M. Callahan, Assistant Executive Director, Pennsylvania School Boards Association