CRSD Public Hearing: Should CRSD
Board Ask Voters to Authorize a
Revenue-Neutral Replacement of
the Occupation Tax with Earned
Income Tax (EIT)?
Agenda:
Brief Presentation - 15 minutes
Public Comment and Questions - 45 minutes
CRSD Board Meeting Follows - Discussion and Vote
CRSD Taxes to Residents
• Real Estate Tax - $132MM in revenue
– 28,000 tax bills, $70K cost to collect (0.06%)
• Earned Income Tax (EIT) - $13.5 MM in revenue
– Flat rate tax (1 tax bracket) on earned income (not
retirement, not dividends, not capital gains)
– City wage taxes are deducted (e.g. New York, Philadelphia)
– $190K cost to collect (1.39% fee to Keystone Collections)
• Occupation Tax - $4.5MM in revenue
– $40 to $320 fee for each occupation (12 tax brackets)
– 32,630 tax bills, $82K cost to collect (2%)
• Per Capita Tax - $460K in revenue
– $10 to each adult resident
– 21,300 per capita only bills, $53K cost (25% cost per bill)
Occupation and Per Capita Tax
• Occupation Tax
– 12 tax brackets, $40 to $320 per occupation
– Millage is set by CRSD board but assessed value of
occupations is frozen in time
– CRSD maintains the tax rolls, trouble shoots issues,
verifies occupations
• Adult children must prove they are students to avoid the tax
• Unemployment must be documented to avoid the tax
• Per Capita
– Paid by all adult residents including students and
retired
Taxing Authority of CRSD Board
• Real Estate ($132 MM revenue)
– Can decrease. Increases < Act 1 Index, Exceptions for
Pension.
• Earned Income Tax ($13.5 MM revenue)
– Can decrease. Increases in the maximum rate must be
approved by voters.
• Occupation Tax ($4.5 MM revenue)
– Can increase or decrease millage, subject to Act 1 Index
– Must eliminate and replace with EIT if voters asked and say
yes
• Per Capita ($460K revenue)
– Can eliminate
Proposed Path to Eliminating
Occupation and Per Capita
• Ask voters to allow elimination of the
Occupation Tax by Increasing the Earned
Income Tax by 0.17% (revenue neutral)
• If approved
– Occupation tax is eliminated
– CRSD Board must decide if it is worth collecting
Per Capita tax (25% cost revenue to collect when
not bundled together with occupation tax bills)
Results of Tax Change
(2012-2013 Estimates)
Currently
• Households Receive Three
Bills Each Year
• 82,000 Tax Bills Per Year
• Occupation Tax Brackets: 12
• EIT Tax Brackets: 1 (1.0%)
• Revenue EIT + Occ + Per
Capita : $18. 1MM
• Cost of Collection EIT + Occ
+ Per Capita: $413K
If Occupation Eliminated, Replaced
by EIT, and Per Capita Eliminated
• Households Receive 1 Bill
Each Year
• 28,000 Tax Bills Per Year
• Occupation Tax Brackets: 0
• EIT Tax Brackets: 1 (1.17%)
• Revenue EIT:
$17.7 MM
• Cost of Collection EIT: $261K
Example Impacts By Occupation
Description
Baby Sitter, Private Maid, Part-Time NonProfessional
School Bus Driver, Self-Employed (Part-time),
Instructional Assist.
Sec.-Legal, Nurse, Medical Assistant, Recruiter,
Copy Writer, Physician Assistant
Accountant, Artist & Sculptor, Author Writer,
Recruiter, Assistant Supervisor, Para Legal,
Dancer-Dancing Instructor, Public Relations,
Equip Operator, Entertainer, Law Clerk,
Photographer, Counselor, Caseworker
Mediator Negotiator, Teacher, Consultant,
Foreman
Orthodontist, Attorney, Physician/Surgeon,
Ophthalmologist, Psychiatrist
If your
earned
Per This is Your
Assessed Tax
income is
Capita Existing Tax
Value Amount
less than
Tax
Amount
below will
pay less
$100
$40
$10
$50
$29,412
$200
$80
$10
$90
$52,941
$350
$140
$10
$150
$88,235
$400
$160
$10
$170
$100,000
$450
$180
$10
$190
$111,765
$800
$320
$10
$330
$194,118
CRSD Median EIT ~$30,000 and Mean ~ $70,000
What Would Happen to Your Taxes?
Tax Calculator Placed on CRSD Web Site
www.crsd.org
PA School Districts With the
Occupation Tax
• Act 511, LOCAL TAX ENABLING ACT was originally
enacted into law in Pennsylvania on December
31, 1965.
• In 1993 there were 110 school districts collecting
• In 2011 there were 50 school districts collecting
• In Bucks County: We are the only one of the
thirteen school districts that continues to levy the
tax
Additional Information
Facts Concerning the Occupation Tax
• The amount of the tax liability for each person is
determined by the job title and millage rate…it is
not determined by income.
• Typically paid in a lump sum in the fall of each
year.
• Receive the most complaints concerning the
“fairness” of the tax.
• Difficult to administer:
– Identifying residents/verifying job titles.
– Consistency of assigning job titles.
– Proper reporting of job titles.
Use of 2008-09 for Calculation
(State Law Requires ‘08-09 or ’01-02)
Law Requires EIT Increase be Rounded to Nearest 0.1% to Match Occ
2009 with Occ and 1% EIT
• Occupation Taxes (Current
and Delinquent)
– $4,506,592
• Earned Income Tax (½ 0f
1%)
– $12,991,216
• Total
2009 with 1.17% EIT
• Occupation Taxes (Current
and Delinquent)
– $0
• Earned Income Tax (1/2 of
1% and 0.17%)
– $17,408,229
• Total
– $17,497, 808
$17,497,808
– $17,408,229
History of the Occupation Assessment
Tax
• The Occupation Assessment Tax was enacted by
the district on June 26, 1973.
• Millage Rate increased from 250 mils to 500 mils
from the original enactment through 1986.
• June of 1997 the millage rate was reduced to 400
mils with the intent to eliminate the tax over
time.
• On November 7, 2007 the community voted
down a referendum question by the count of
5,026 in favor of the change and 7,306 against
the change.
Considerations
Currently
• 21,200 Per Capita Only Bills
($2.50 to collect each $10)
• 53,900 Occ + Per Capita Bills
• 18 Year old graduating from
High School must pay $10.
• Retired, no EIT: $10 Tax
• Just lost job: $10 Tax, Call
CRSD to Change Occupation
• Wait for refund until loss of
job is documented.
After Board Actions and Voter
Approval
• 0 Per Capita Only Bills
($0 to collect $0)
• 0 Occ + Per Capita Bills
• Students will not pay tax
until employed
• Retired, no EIT: $0 Tax
• Just lost job: $0 Tax, No Calls
to CRSD
• No need for refund
Retired, Husband and Wife, Retirement Income - $40,000
Current Tax
Structure
Earned Income
Tax Rate
Earned Income Tax
Occupation
Occupation
Assessment
Millage
Occupation Tax
$
Structure Under
Approved Referendum
$
1.00%
$
$
Retired
$
Results
1.17%
$
-
Retired
400
-
Per Capita
# of Per Capita Bills
Per Capita Rate
Per Capita Tax
$
$
2
10.00
20.00
Total Tax
$
20.00
$
-
$
-
$
$
2
-
$
(20)
$
-
$
(20)
Sales Person, Non-Working Spouse and Two Adult Children
Current Tax Structure
Earned Income
Tax Rate
Earned Income Tax
Occupation
Occupation Assessment
Millage
Occupation Tax
$
$
100,000
1.00%
1,000
Sales Person
400
400
$
160
Structure Under
Approved Referendum
$
Results
100,000
1.17%
1,170
$
$
170
-
$
(160)
Sales Person
$
Per Capita
# of Per Capita Bills
Per Capita Rate
Per Capita Tax
$
$
$
4
10
40
$
$
$
2
-
$
(40)
Total Tax
$
1,200
$
1,170
$
(30)
Family of Five, Doctor and Attorney
Structure Under
Approved
Referendum
Current Tax
Structure
Earned Income
Tax Rate
Earned Income Tax
Occupation
Occupation Assessment
Millage
Occupation Tax
$300,000
1.00%
$ 3,000
Physician/Attorney
$
1,600
400
640
Per Capita
# of Per Capita Bills
Per Capita Rate
Per Capita Tax
$
$
2
10
20
Total Tax
$
3,660
Results
$ 300,000
1.17%
$ 3,510 $
510
Physician/Attorney
-
$
$
- $
(640)
$
$
2
- $
(20)
3,510 $
(150)