Weighing The EIT From a Business Perspective

What would an Earned Income Tax (EIT) mean for businesses in the T/E School District. That's the question the district's Tax Study Group put to leaders from several businesses and business organizations in the most recent EIT hearing.

The answer depends on who you ask.

Jim Hanna and Justin Nepo of Hanna McGloan & Co., Bernard Dagenais the CEO of the Main Line Chamber of Commerce, Steve Storti of Prudential Fox and Roach and Paul Adkins Assistant Controller, of Vanguard, all offered their persepctives at the Tax Study Group’s latest hearing.

Jim Hanna, Managing Partner at Hanna McGloan & Co., a CPA firm in King of Prussia and his Partner Justin Nepo, who has a masters degree in taxation and is on the state and local tax committee for the Pennsylvania Institute of CPA’s, spoke first.

From a taxation point of view, Nepo explained that the addition of an EIT would weigh most heavily on the employers who would have to initiate new processes and incur increased administrative costs to collect the proper tax information. But the majority of costs would be low, and easily absorbed, assuming that many businesses use a third party to file payroll. For smaller companies, it would become more burdensome.

Next to speak was Bernard Dagenais, of the From a competitive standpoint, Dagenais stated that he “has serious reservations and concerns,” about initiating an EIT and that Tredyffrin risks “giving up a competitive advantage.”

Steve Storti, Vice President of Marketing, Prudential Fox and Roach gave a residential real estate position on the effects an EIT may make. Storti noted that neighboring areas have not initiated an EIT and that “there’s a perceived disadvantage to being different.”  Those in the market who aren’t buying into the area because of the school district will ultimately buy elsewhere.

Paul Adkins of the Vanguard Group came at the discussion from the standpoint of being the largest employer in Tredyffrin. It’s administrative costs wouldn’t be a factor, because many of the Vanguard “Crew” already have EIT’s in their respective hometowns. There would only be an additional 300 employees that would be paying into the TE District. But Vanguard was looking further downs the line, when it comes to an EIT.

“We wouldn’t vehemently oppose the concept of an EIT, “ he said. “Specifically if there was an intent to balance off property taxes.”

The tax Study Group is scheduled to make its report to the T/E School Board in November.