City of Pittsburgh Income Tax

[pman]

Originally Posted by BrianTH

I suspect that really depends on the details, but to the extent you are arguing that in the Pittsburgh area we likely have the balance too far toward property taxes and too far away from wage taxes, I agree with your conclusion.

the larger point that, by and large, re taxes don't provide enough benefit from the stability to really make that argument. I suspect, in the coming decades, are values will actually lag income in most areas, turning the paradigm on its head.

Originally Posted by BrianTH

Maybe, but shouldn't room also be made for the increased needs and better investment opportunities often associated with economic downturns? Indeed, isn't it a problem that we are spending revenues in other periods on programs you view as non-essential, just because the revenues are higher then?

yes, but not through real estate taxation. "rainy day funds" are a better tool for that. and yes, to the spending side. municipalities, just like individuals, should have some sort of savings fund accumulating for larger investments or "rainy days." those, coupled with better budgeting, should alleviate a lot of the problems. moving away from defined benefit plans woudl also help enormously.

Originally Posted by BrianTH

Maybe we should be doing more with sovereign funds and such. Maybe we should more explicitly set the terms of counter-cyclical borrowing in advance. And so on.

I don't know about this, and I think you're getting into your theory that human nature can be eliminated along with the business cycle and that's totally off topic. cycles are alive and well in all countries, but we're getting off the topic. I'm less interested in personal preferences than actual taxes here.

[mckeesport_alum]

Originally Posted by pman

it seems like there's a 1% net profits tax on distributions for all businesses not incorporated? what about LLC's or s-corp's?? seems like incorporating in any other form would make you subject to the state's onerous CNI (9.99%)


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Profits from S-Corps are required to be distributed to shareholders annually and are not treated as wages in Pittsburgh. All wages and income from LLCs and sole-props are treated as wages / earned income. My S-Corp does not operate in Pittsburgh so I don't have to pay businesses taxes to it, however I believe there are business license fees. Pittsburgh finally got rid of the archaic and unfair business mercantile tax for retail businesses. Instead, it taxes a certain percentage of the business's payroll (I think 0.5%).

[BrianTH]

Originally Posted by pman

the larger point that, by and large, re taxes don't provide enough benefit from the stability to really make that argument. I suspect, in the coming decades, are values will actually lag income in most areas, turning the paradigm on its head.

At least in theory, property values represent the present value of future rents, and historically they have sometimes proven more stable than present incomes. But I agree that in the near future, we may see stagnant (or declining, particularly in real terms) property values in many places.

yes, but not through real estate taxation. "rainy day funds" are a better tool for that. and yes, to the spending side. municipalities, just like individuals, should have some sort of savings fund accumulating for larger investments or "rainy days." those, coupled with better budgeting, should alleviate a lot of the problems.

We basically agree on most of this. But I do think to the extent we can diversify revenue sources and keep them a little less cyclical, that can be a good thing.

moving away from defined benefit plans woudl also help enormously.

That is a complex topic. The problem with defined contribution plans is that they shift the relevant risks to the employee, and a lot of that risk would be diversifiable if it was instead pooled. So you would actually have to increase total compensation to make up for the increased individual risk. However, you could get around that problem a bit by limiting the investment of the contributions to risk-pooling measures (like certain annuities).

I don't know about this, and I think you're getting into your theory that human nature can be eliminated along with the business cycle and that's totally off topic.

Not only is that off topic, but you have completely misstated my views. So, yes, you are probably better off sticking to other topics.

The point I was actually making, however, had nothing to do with those issues. There are only two basic ways of moving revenues from one time period to another: saving and borrowing. There are lots of ways of doing those things, however, and my point was that if you want policies to those effects that work a little better and are less subject to abuse and misuse, it might make sense to formalize those programs more than we often do, in advance, as opposed to trying to do things on an ad hoc basis.

[pman]

Originally Posted by mckeesport_alum

Profits from S-Corps are required to be distributed to shareholders annually and are not treated as wages in Pittsburgh. All wages and income from LLCs and sole-props are treated as wages / earned income. My S-Corp does not operate in Pittsburgh so I don't have to pay businesses taxes to it, however I believe there are business license fees. Pittsburgh finally got rid of the archaic and unfair business mercantile tax for retail businesses. Instead, it taxes a certain percentage of the business's payroll (I think 0.5%).

so if I run an LLC or S-corp, I pay only the payroll tax, and whatever I take out I pay wage tax on? froam a business location standpoint then, it would seem the number one business issue would be the CNI for the state.

Brian-perhaps we don't really disagree then, or so it would seem when specifics rather than generalities are discussed. but batck the burgh, it would seem property taxes and wage taxes are high due to the school district. while I'm not totally sold on the payroll tax, if that's the only tax on business, it's fairly reasonably (in my mind). the number one deterrent to me thenis the property tax (although the wage tax is high enough that increasing it decrease property taxes would put it in Philadelphia territory, and the deleterious impact of the wage tax there is well documented and real...it's no coincidence that it's renewal, such as it is, coincided with a 20% cut to the wage tax there). in fact, pitt's is probably still too high, I'd put 2-2.5% as the target, and a cut to property taxes as well. of course, the question is, how to accomplish that while growing the base.

[BrianTH]

Originally Posted by pman

but batck the burgh, it would seem property taxes and wage taxes are high due to the school district.

Well, that is certainly a big part of it. Of course the City does get a substantial share of those taxes, and conversely the District gets something like 45% of its funding from other sources.

[pman]

I suppose increased population would lead to reduced per capita expenses. indeed, Philadelphia at one point, under Rendell, adopted a slow and steady series of cuts to the wage tax. it was probably too slow, but you did see lower rates and higher receipts over that period. of course, they continued to throw good money after bad (funding questionable programs instead fo pensions) leaving themselves in a hole like most others). anyway, thinking about income and business taxes, I wonder how it relates to the pittsburgh paradox (http://www.slate.com/id/2265068/pagenum/2 - broken link)
speficially, low attendance, and low payroll from the pirates seems like it would result in the lowest possible tax reciepts for the city for its investment. do the pirates pay property taxes? (the phillies do not, even the surface lots there are tax free, leased from the city, though at least the city is benefitting from high wage taxes and amusement taxes (not to mention beer sales). if a player lives outside the city, they only pay 1%? where do the players live?