The new occupation tax: How not to treat the working poor

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Who thought an annual $52 tax coming out of a single paycheck was a good idea? Maybe you hardly felt the hit, but what if you worked at McDonald's?

Even an inveterate critic of America's largest full-time state Legislature must stand in awe at the callous indifference to real life represented here. Trying to find the responsible party for this outrage is as pointless as determining which Roman senator's knife killed Julius Caesar. The deed is done, and the blame is collective.

This new tax, replacing a $10 annual occupation tax that hadn't moved since 1965, could have been a painless buck a week or $13 a quarter. Any worker could handle that. That was Beaver Cleaver's allowance 40 years ago.

But when our Legislature passed the law authorizing a $52 annual tax, it inexplicably cut language from the bill that said "the taxing authority may authorize payment of the tax on a quarterly or more frequent basis."

So Pittsburgh and more than 200 other municipalities across the state scrambled to get the money all at once. The city finance department advised employers to deduct the tax from January checks, fearing that somebody working two jobs might pay somewhere else first. (More than 40 municipalities in Allegheny County already have the tax.) When Kevin Joyce, owner of The Carlton restaurant, found in a later inquiry that he need not get the money to the city until Feb. 28, he was livid.

"Do you have any idea how many tipped employees received checks for $0?" Joyce asked. "Another month to pay the $52 would have been welcome news to many lower-wage earners."

Nobody worried about them, not in Harrisburg and not on Grant Street. The new law allows taxing authorities to exempt low-paid workers, to charge them only the old $10 annual tax, but these workers got the shaft instead. The city advised employers to deduct the full $52 from every worker. Anyone earning less than $12,000 a year can show their W-2s next year for a $42 refund. In other words, a fast-food worker near you will be paying another $52 next winter before he has even gotten his $42 back.

The city backs reform language that allows payment on a quarterly basis. Mind you, the new law doesn't say you can't pay $13 quarterly. It just doesn't say you can, and a strapped city had no interest in slowing the flow of new money.

It's not as if the city is alone. A few municipalities have imposed a tax less than $52. Some intend to grab the money only after, say, $3,000 in pay is earned. But state data show that most places with this tax take the maximum. Some of these 200 or so municipalities kick $5 back to the school district, but the effect is the same on the citizen's wallet.

Sometimes I think Pennsylvania has a death wish. Our map seems to be the work of a deranged quilter on speed, with more than 2,500 townships and boroughs surrounding 56 cities. That makes the trick of living here simple: Live close to a city with high-paying jobs, just don't live in it. Our most prosperous communities are the bedroom variety, where nearly everyone commutes out for paychecks. That keeps high public safety costs somewhere else.

All the job centers in our state are struggling. Nineteen cities -- little ones such as Uniontown, medium ones such as Reading and Lancaster, and big ol' Philadelphia -- are in even worse shape than Pittsburgh, according to a recent study by American City Business Journals, parent company of the Pittsburgh Business Times.

This tax, officially called the Emergency and Municipal Services Tax, is designed to help pay for cops, firefighters, ambulances, roads and such. But people were expected to leave only a crumb where they earn their bread, not get whacked upside the head with the whole loaf in the post-holiday month when wallets are thinnest. State Sen. Sean Logan, D-Monroeville, doesn't know how this happened but says it's unacceptable. Logan is among 16 senators pushing a bill to allow the tax to be paid quarterly.

Bet you $42 we'll see property tax breaks first. The working poor have nowhere near the clout of homeowners.

Brian O'Neill can be reached at or 412-263-1947.


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