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Breaking: Judge orders Harrisburg City Council to double income tax rate

By   /   August 27, 2012  /   No Comments

By Eric Boehm | PA Independent

HARRISBURG — Residents of Pennsylvania’s debt-saddled capital city will see their earned income taxes double, a state judge ruled Monday.

Commonwealth Court Judge Bonnie Leadbetter ordered the Harrisburg City Council to raise the city’s income tax from 1 percent to 2 percent within the next 15 days.

The new revenue from the tax increase will be used “only to pay for the services essential to the public health, safety or welfare,” will not be split with the city’s school district and will not be used to pay off any of Harrisburg’s estimated $1.5 billion in debt, Leadbetter ordered.

The tax will be implemented immediately, after the City Council passes it, and will remain in place for one year, the judge ordered.

Maj. Gen. William Lynch, the city’s state-appointed receiver, wanted the tax increase as part of a plan to generate more revenue as part of a state-approved recovery plan for the fiscally distressed capital.

Lawyers for the City Council argued before Leadbetter last week that it was unconstitutional for a state office — in this case the office of the receiver — to order the council to increase taxes.

The current 1 percent earned income tax is split between city coffers and the Harrisburg School District.

The Pennsylvania Economy League, which subcontracts with the state’s Department of Community and Economic Development to monitor finances for Pennsylvania’s fiscally distressed municipalities, estimated that the 100 percent tax rate increase would generate $1.7 million in 2012.

Harrisburg is slated to end the year with a $12 million deficit.

Melissa Daniels contributed to this report.

Contact Eric Boehm at Eric@PAIndependent.com or Melissa Daniels at Melissa@PAIndependent.com.

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Eric is the national regulatory reporter for Watchdog.org. He lives in St. Paul, Minnesota. His work has appeared in Reason Magazine, National Review Online, The Freeman Magazine, The Philadelphia Inquirer, The Washington Examiner and Fox News. He was once featured in a BuzzFeed list-icle. Follow him on Twitter @EricBoehm87.