Pennsylvania’s state Senate voted Wednesday to pare back a Depression-era law that allows Philadelphia to impose a commuter tax on suburban residents.
The bill passed, 28-21, with every Republican and one Democrat backing it. However, it likely faces a chilly reception in the state House of Representatives, where Democrats have a one-seat majority.
Under the bill, Philadelphia would lose the authority to impose a wage tax on people who work from home, even if they work for employers located in the city. For those who perform some of their duties outside the city, Philadelphia could only tax their earnings proportionate to the amount of work they performed in the city.
The bill’s sponsor, Sen. Frank Farry, R-Bucks, and other supporters said the law is outdated because it requires people who work from home to pay Philadelphia wage taxes just because they work for an employer in Philadelphia.
Those inequities were highlighted by the COVID-19 pandemic when more people started working from home, Farry said.
Democrats accused Republicans of fast-tracking the bill, introduced just days ago, and of abruptly trying to take $200 million away from the city. A better approach is to come up with a bipartisan and thoughtful approach, they said.
Communities in Bucks County lose over $10 million per year due to the law, Farry said. He also questioned the city’s estimate that it reaps $190 million a year from the commuter tax. He called the estimate “speculative” and suggested that it is based on inflated projections.
Philadelphia’s total operating budget is about $6 billion under Mayor Jim Kenney.