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                                                       PRINTER'S NO. 475

THE GENERAL ASSEMBLY OF PENNSYLVANIA


HOUSE BILL

No. 411 Session of 2007


        INTRODUCED BY PETRI, CALTAGIRONE, COHEN, CURRY, GALLOWAY, GEIST,
           HARHART, HENNESSEY, MOUL, PHILLIPS, ROHRER, RUBLEY, SABATINA,
           SAYLOR, SIPTROTH, SONNEY, STERN, SWANGER, VEREB AND WATSON,
           FEBRUARY 13, 2007

        REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 13, 2007

                                     AN ACT

     1  Amending the act of June 22, 2001 (P.L.374, No.24), entitled, as
     2     amended, "An act providing for optional occupation tax
     3     replacement," further providing for earned income tax rate
     4     limits; and requiring referendum under certain circumstances.

     5     The General Assembly of the Commonwealth of Pennsylvania
     6  hereby enacts as follows:
     7     Section 1.  Section 4(b) of the act of June 22, 2001
     8  (P.L.374, No.24), known as the Optional Occupation Tax
     9  Elimination Act, amended June 29, 2002 (P.L.642, No.96), is
    10  amended to read:
    11  Section 4.  Earned income tax rate limits.
    12     * * *
    13     (b)  Calculation of maximum earned income tax rate.--The
    14  maximum earned income tax rate shall be determined by taking the
    15  sum of the rates calculated under paragraphs (1) and (2) and
    16  limited by paragraph (3):
    17         (1)  The rate of the earned income tax that would have
    18     resulted in the collection by the political subdivision of an

     1     amount equal to the amount collected from the occupation tax.
     2     The calculation by a school district under this paragraph
     3     shall be made using the average of the actual revenue
     4     collections for the [fiscal year ending in 2002.] two fiscal
     5     years immediately prior to the date of the referendum under
     6     section 7. The calculation by a municipality under this
     7     paragraph shall be made using the average of the actual
     8     revenue collections for the [calendar year ending December
     9     31, 2001.] two calendar years immediately prior to the date
    10     of the referendum under section 7.
    11         (2)  The rate at which the earned income tax was
    12     collected by a school district for the fiscal year [ending in
    13     2002] immediately prior to the date of the referendum under
    14     section 7 or the rate at which the earned income tax was
    15     collected by a municipality for the calendar year [ending
    16     December 31, 2001.] immediately prior to the date of the
    17     referendum under section 7.
    18         (3)  The tax rate determined under paragraphs (1) and (2)
    19     shall be rounded off to the nearest increment of ten
    20     hundredths of one percent.
    21  The maximum rate of the earned income tax calculated under this
    22  subsection shall not be subject to the limits on the earned
    23  income tax specified in section 8(3) of The Local Tax Enabling
    24  Act.
    25     * * *
    26     Section 2.  The act is amended by adding a section to read:
    27  Section 7.1.  Referendum required.
    28     (a)  Question authorized.--In the case of any political
    29  subdivision which levies the occupation tax on July 1, 2005, the
    30  appropriate county board of elections shall prepare a ballot
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     1  question on whether to eliminate the occupation tax and obtain
     2  replacement revenue by an increase in the earned income tax.
     3     (b)  Replacement revenue.--
     4         (1)  Representatives of the county board of elections
     5     shall contact the governing body of the political subdivision
     6     to calculate the additional amount of earned income tax
     7     necessary to replace the revenue generated by the occupation
     8     tax as provided in section 4.
     9         (2)  If the governing body fails to provide the
    10     information in a timely manner, representatives of the county
    11     board of elections shall calculate the rate of the earned
    12     income tax as provided in section 4.
    13     (c)  Ballot question.--The county board of elections shall
    14  place the question on the ballot at the municipal election held
    15  in November 2007.
    16     (d)  Contents of question.--The referendum question must
    17  state the maximum rate of the earned income tax calculated under
    18  section 4 and that the additional revenue generated by an
    19  increase in the earned income tax will be used to eliminate the
    20  occupation tax. The question shall be in clear language that is
    21  readily understandable by a layperson. For the purpose of
    22  illustration, a referendum question may be framed as follows:
    23         Do you favor increasing the rate of the earned income tax
    24         to a maximum of X% with the requirement that the increase
    25         be used to eliminate the occupation tax?
    26     (e)  Vote.--
    27         (1)  If a majority of the electors voting on the question
    28     vote "yes," then the governing body shall be authorized to
    29     implement an increase in the earned income tax pursuant to
    30     section 4 and shall be required to eliminate the occupation
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     1     tax as required by section 5.
     2         (2)  If a majority of the electors voting on the question
     3     vote "no," the governing body shall have no authority to
     4     increase the rate of the earned income tax above the maximum
     5     rate otherwise provided by law.
     6     (f)  Voting proceedings.--Proceedings under this section
     7  shall be in accordance with the provisions of the act of June 3,
     8  1937 (P.L.1333, No.320), known as the Pennsylvania Election
     9  Code.
    10     (g)  Public notice.--
    11         (1)  Prior to the consideration of a ballot question
    12     under this section, the county board of elections shall give
    13     notice of the pending ballot question. The notice shall be
    14     given in addition to all other notices required by law and
    15     shall set forth the substantial nature of the tax to be
    16     imposed, the reason which, in the judgment of the governing
    17     body of the political subdivision, necessitates the
    18     imposition of the tax, and the amount of revenue estimated to
    19     be derived from the tax and the tax to be repealed.
    20         (2)  Publication of the notice shall be made by
    21     advertisement once a week for three weeks in a newspaper of
    22     general circulation within the political subdivision if there
    23     is such newspaper, and if there is not, then the publication
    24     shall be made in a newspaper of general circulation within
    25     the county in which the advertising political subdivision is
    26     located.
    27     Section 3.  This act shall take effect in 60 days.


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