Senate Bill 1372, introduced by Sen. Vincent Fumo (D-Philadelphia,) now advances to the Senate floor.

     Under the proposal, the wage tax rate would decline from its current level of 4.54 percent to 3.5 percent for city residents, and from 3.95 percent to 3.04 percent for non-residents. Both reductions are 23 percent. The cuts would be phased in gradually over a period of five years.

     Prior to passage, the Appropriations Committee adopted an amendment offered by Sen. Robert Tomlinson (R-Bucks) that removed from the bill a trigger provision that would have allowed the full annual scheduled reduction to take place only in years when economic growth reached a certain level.

     "This vote shows that there is significant bi-partisan support in the Senate for reducing Philadelphia’s wage tax," Fumo said. "People in the city and the suburbs realize that this tax is so high that it chases jobs out of the city. It is an economic drain on the entire region, and it is time we changed that."

     Since 1992, Philadelphia has lost almost 20,000 jobs, a decline of 2.83 percent. Over the same period, Pennsylvania’s overall employment grew by 11.49 percent.

     A resident wager earner with annual income of $50,000 would save $519 per year by the time the cuts are fully implemented in five years. Someone with annual income of $100,000 would see the tax burden reduced by $1,039 in the fifth year.

     Sen. Fumo has offered a list of suggestions for the city to make up for the lost money without painful cuts to city services. Eventually, the increased economic activity within the city resulting from a lower tax burden would generate additional revenue that would replace some of the lost funding.

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