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Voters to assess tax increase

August 16, 2012

Photo by Greg Reedy – Following the Ridgway Area School District Board of Directors' approval to place a referendum question on the ballot of the November general election opting to increase the earned income tax in order to eliminate the occupation assessment, many taxpayers are asking themselves which way to vote.

Following the Ridgway Area School District Board of Directors' approval to place a referendum question on the ballot of the November general election opting to increase the earned income tax in order to eliminate the occupation assessment, many taxpayers are asking themselves which way to vote.
On Tuesday, Aug. 7, the board approved a referendum designed to repeal its existing occupation tax and replace the lost revenue by increasing the existing earned income tax by .4 percent.
Currently the earned income tax is one percent with one-half going to the district and one-half going to the municipalities. If approved the earned income tax would be 1.4 percent with .9 percent going to the district and .5 percent to municipalities.
According to Finance Manager Brent Rhoads, deciding whether the referendum is right for you is a fairly simple calculation.
For the assessment of the occupation tax, all individuals over 18 years of age are assessed a a valued based on their occupation by the Elk County Assessment Office. The assessments range from $0 to $300 based on their level of occupation. For example housewives are assessed at $0 while professionals at the top tier such as doctors and lawyers are assessed the maximum $300. According to Rhoads, once these values are in place the school district levies a tax on those assessments. Taxes are calculated by your assessed occupation by 1.1 percent. For example a doctor assessed at the maximum $300 would pay $330 whereas a secretary who is assessed at $125 whether they are making minimum wage [$15,000 per year] or earning a salary of $60,000, both would pay the $137.50 occupation tax.
Earned income includes wages, commissions, bonuses, tips and self-employment income and does not include dividends, interest, rents or pensions.
To compare the cost of paying the occupation assessment tax versus the .4 percent increase in earned income tax, Rhoads advises taxpayers to multiply their net earned income by .004 to calculate the difference.
For example, the secretary who earns $15,000 per year would pay $60 with the .4 percent increase in earned income whereas before she would be paying a universal occupation assessment at $137.50.
For the higher paid secretary who earns $60,000 a year she would pay an additional $240 with the .4 percent increase in earned income tax whereas she would only be paying $137.50 in occupation tax.

Pick up a copy of the Friday, Aug. 17, 2012 edition of The Ridgway Record for more.

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