UDA board approves resolution
Published: July 3, 2014
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LOYALTON - Upper Dauphin Area School District voters will have a say this November in how they'll be taxed.
The UDA school board June 26 approved a "tax swap" resolution by a 6-1 vote. Board members voting in favor of the resolution, which places a referendum question on the ballot were David Barder, Mills Eure, Gerald Wiest, Kathryn Talhelm, Roni Mace and Angela Mattern.
Director Jack Laudenslager was opposed; and directors Rev. Nathan Minnich, and Tony Matter were absent.
According to the Optional Occupation Tax Elimination Act, the school district may eliminate the $250 occupation tax and replace it with an earned income tax, pending results from voters.
The district will now direct the Dauphin County Board of Elections to place the following referendum question on the November 4, 2014, ballot:
Do you favor eliminating the $250 occupation tax by increasing the rate of the Upper Dauphin Area School District earned income tax from .5% to a new school district maximum tax rate of 1.1%, and a maximum new total tax rate together with municipalities of 1.6% effective July 1, 2015?
The district's Business Manager, Mary Bateman, is also directed to provide the Dauphin County Board of Elections with a copy of the resolution no later than August 6, 2014.
In the event the majority of electors voting on the referendum question on November 4, 2014, vote in favor of the elimination of the occupation tax by the increase of the earned income and net profits tax rate, the board will, in May or June, adopt a new Earned Income Tax Resolution eliminating the occupation tax and increasing the earned income and net profits tax rate collected by the school district to 1.1% effective July 1, 2015.
If the majority electorate votes against the referendum, UDA's current taxing method will remain in place.
The district submitted a "Letter to the Editor" to The Citizen-Standard, which ran in the April 10 edition, explaining the details of the tax swap plan. The school board also held a Tax Swap Hearing June 10 in the middle school auditorium, inviting members from the public to present their questions and concerns.
The following information was supplied by the school district:
What is the Tax Swap?
- It is a swap - the district would exchange the Occupation Tax of $250 for an Earned Income Tax.
- According to the formula in the law, the district calculated the Earned Income Tax could increase by .6% to yield an equivalent to the Occupation Tax.
- If passed by referendum, the .6% increase would go into effect for the 15-16 school year.
- If approved .6% is the maximum amount and cannot be changed without another referendum.
- Presently, the local Earned Income Tax is 1% - .5% goes to the school district and .5% to the local municipality.
- The Tax Swap would eliminate the Occupation Tax of $250 and increase the local Earned Income Tax to 1.6%. The Tax Swap would not eliminate the small Per Capita taxes.
- People who are presently exonerated would only pay tax on earned income - someone with $2,000 earned income would pay 1.6% local tax on that money, or $32.
- A retiree with no earned income would pay nothing.
- Presently, the Occupation Tax is billed yearly. The Earned Income Tax would be levied as a payroll deduction.
- For someone making $42,000 earned income, under this Tax Swap that person's tax would be .016 multiplied by $42,000 or $672 - $252 more than the previous year, or about the same amount as the Occupation Tax.
- Someone making more than $42,000 would pay a higher amount than the previous $250.
- Someone making less than $42,000 would pay less than the previous $250.
- Unlike the Occupation Tax, the Earned Income Tax would be deductible on federal income tax returns, if the taxpayer itemizes deductions.