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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: March 22, 2017 09:33 PM
From: Representative Scott A. Petri
To: All House members
Subject: Sterling Act - Reimbursement
This week I will be introducing legislation that will amend the Sterling Act to remove Philadelphia’s power of pre-emption on local income taxes by applying tax collection practices that mirror those exercised by other taxing jurisdictions under the Local Tax Enabling Act.

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. As you know, the city of Philadelphia imposes a City Wage Tax on salaries, wages, commissions and other compensation paid to employees working for a Philadelphia employer. All Philadelphia residents owe the City Wage Tax regardless of where they work. Non-residents who work in Philadelphia must also pay the 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 district.

As a result of this disparity of tax practice, many surrounding suburban areas are losing significant tax revenue to support their police, fire, EMS, and schools from their residents who work in Philadelphia. My legislation will 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 residents of their respective areas.

I hope you will consider joining me in sponsoring this important legislation.

Introduced as HB1314