Most people who work in Pennsylvania pay a 1-percent earned income tax. Many are not aware the tax is deducted from their paychecks. However, knowing where the EIT is paid can make all the difference.
As Falls Township considers instituting an EIT beginning in 2023, a study found that township residents are paying roughly $3.5 million in said taxes to other taxing authorities, i.e., the municipality where they work. If the Falls Supervisors follow through on adding the tax, it would only change where the tax is paid, not how much. Instead of taxes being paid to another town, residents’ EIT would be paid locally, to Falls Township.
The only exception is for people who work in Philadelphia. Those employees would continue paying their EIT to the City of Brotherly Love.
On Monday night, the Supervisors voted 3-2 to authorize advertisement of the proposed EIT, with Supervisors Erin Mullen and Brian Galloway casting no votes.
Should the board adopt the EIT, Falls expects to net about $7 million “on the conservative side,” according to Supervisors Chairman Jeff Dence. The tax would not impact senior citizens, those who are not working or employees who earn less than $8,000 per year.
In general, the EIT would be paid by anyone earning more than $8,000 per year while working and/or living in Falls Township.
Falls Township is one of the few municipalities in Bucks County without an EIT. For years some residents have urged the board to institute the tax.
The township’s 2023 preliminary budget projects $5.25 million in revenue generated from the EIT, which would reduce the township’s reliance on landfill host community fees to $10.3 million. Considering the EIT is a means for Falls to wean off the more than $1 million per month financial windfall that has been the landfill.
“This township has relied on a landfill as long as I’ve lived here and much longer than that,” Dence said. “There is an end in sight for the landfill.”
As a result, Dence said the EIT is a first step in securing the financial future for Falls once the landfill closes in several years.
Supervisors Vice Chairman Jeff Boraski called the EIT “a tough decision” and noted that he is paying a 1-percent EIT to Huntingdon Valley.
“It’s the future of the township,” Boraski said. “We’re losing $3.5 million.”
Supervisor John Palmer voted in favor of advertising the EIT but said he may not be on board with instituting the tax.
“I know a ton of people that don’t pay any right now,” he said. “We might have to go back to the budget and make some hard decisions.”
The Falls Supervisors will consider adopting the EIT at its next meeting on Dec. 19.