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CRSD Tax Referendum

CRSD Tax Referendum. Bob Reinhart, Business Administrator CRSD Bill Foster, School Director CRSD Region 1. Tax Referendum Question. Do you favor eliminating the Occupation Tax by increasing the maximum rate of the Earned Income Tax from 1.00% to 1.17%, with the requirement that the

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CRSD Tax Referendum

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  1. CRSD Tax Referendum Bob Reinhart, Business Administrator CRSD Bill Foster, School Director CRSD Region 1

  2. Tax Referendum Question Do you favor eliminating the Occupation Tax by increasing the maximum rate of the Earned Income Tax from 1.00% to 1.17%, with the requirement that the increase be used to eliminate the Occupation Tax? • Result of Yes Vote Majority: • CRSD must eliminate the Occupation Tax forever starting 2014-15 • CRSD may set the Earned Income Tax in any future year • to at most 1.17% (0.67% going to CRSD)

  3. 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)

  4. Occupation Tax EIT Differences Occupation Tax EIT • 1 tax bracket • CRSD can not increase max rate • CRSD can decrease • Paid annually based on income. Lost income reduces tax paid • 6% of budget in 1995-96 • 7% of budget in 2011-12 • Tax administered by Keystone • Cost of collection 1.39% of revenue • Processed separately • 12 brackets, 390 occupations • CRSD can increase yearly • CRSD can decrease • Paid annually – no refunds if become unemployed, retired • 4% of budget in 1995-96 • 2% of budget in 2011-12* • Tax administered by district • Cost of collection > 2% of revenue • Sent with Per Capita bills *Occupation tax was last increased in 1986. Consumer price index rose 50% from 1995 to 2012.

  5. Example Impacts By Occupation CRSD Median Earned Income ~$30,000 and Mean ~ $70,000

  6. How would change impact your taxes? http://taxcalc.crsd.org/

  7. Three Ways to Deal With Occupation and Per Capita Taxes • Do nothing • Continue complex taxes with high overhead • Transfer over time of Occupation Tax to real estate taxes or CRSD increases Occupation Tax assessments • Board eliminates these taxes without voter approval • % of budget that is real estate funded rises 3% • Voters direct CRSD to eliminate Occupation Tax and replace with at mosta 0.17% EIT increase • Simpler and cheaper tax to comply with and administer • Transfer of Occupation Tax to real estate is prevented • EIT rate CRSD share always <= 0.67% • Per Capita Tax will then also be eliminated by CRSD board to avoid very high costs of collection (>25%)

  8. Results of Voter Approval(2012-2013 Estimates) Currently If Occupation Eliminated Households Receive 1 Bill Each Year 28,000 Tax Bills Per Year Occupation Tax Brackets: 0 EIT Tax Brackets: 1 (1.17%) EIT rate can not increase Revenue EIT: $17.7 MM Cost of Collection EIT: $261K Tax shift to real estate stopped • Households Receive Three Bills Each Year • 82,000 Tax Bills Per Year • Occupation Tax Brackets: 12 • EIT Tax Brackets: 1 (1.0%) • Occ tax can increase yearly • Revenue EIT + Occ + Per Cap : $18. 1MM • Cost of Collection EIT + Occ + Per Capita: >$413K • Tax shift to real estate ongoing

  9. Questions?

  10. School Districts 2011-12 Budgets

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