DCED Says PA One Step Closer to Refining Earned Income Tax Collection

HARRISBURG, Pa. — School districts and municipalities throughout Pennsylvania can move forward with implementing the new earned income tax collection system now that the commonwealth has cleared an important hurdle.

The Department of Community and Economic Development has posted a "weighted vote" formula on its Web site, which will help tax collection committees begin their work and replace Pennsylvania’s fragmented tax collection system.

Under the new law, each municipality and school district that has imposed an earned income tax is to appoint one representative for a tax collection committee. Each committee member will have a weighted vote in the group’s decisions.

A weighted vote means a delegate’s vote will be based on the proportion of the population and the amount of earned income tax collected in the school district or municipality he or she represents. For example, if one municipality or school district collects more earned income tax and has larger population than another area, its weighted vote would be greater.

As set forth in Act 32, the new earned income tax collection law, DCED was required to provide the initial weighted vote calculation for each tax collection district by Sept. 1. Each newly formed tax collection committee must be formed by Sept. 15, with a first meeting by Nov. 15.

While DCED is responsible for calculating the weighted vote for tax collection committees’ first meetings, they can choose to implement their own voting procedures for future meetings or continue to use the formula DCED is providing. However, the weighted vote will need to be recalculated by that tax collection committee on an annual basis.

The new law, which Governor Edward G. Rendell signed in July 2008, will reduce the number of local earned income tax collectors from 560 to 69 and will capture an estimated $237 million in lost tax revenue per year.

The weighted vote calculations and tax collection district map are available at www.newpa.com by searching under the keyword "weighted vote guide."

For more information on Act 32 or other DCED programs that spur intergovernmental cooperation please visit www.newpa.com.