Warminster Backs Sterling Act Tax Amendment

WARMINSTER, PA —Warminster Township officials would like some of the money going toward Philadelphia for the wage tax it imposes on residents working in the city to return home.

Finance Director John Ramey informed Warminster Township Supervisors at a recent meeting that the township is getting shortchanged by the Sterling Act to the tune of $526,000, fourth most in Bucks County.

At its meeting earlier this month, supervisors approved a resolution supporting the measure.

"The Warminster Township Board of Supervisors agrees with the Bucks County Association of Township Officials regarding the need for the state to amend the Sterling Act. The Sterling Act prevents suburban Townships from collecting the 1 percent Earned Income Tax on residents who live in the suburbs but work in the City of Philadelphia. The City of Philadelphia collects and retains these funds, depriving Townships like Warminster Township of this source of income. Philadelphia is the only municipality in Pennsylvania that is allowed to do this. The Warminster Township Board of Supervisors supports legislation that would end this practice. The 1 percent Earned Income Tax is split between Warminster Township and Centennial School District," the township said in its resolution.

Bensalem Township loses $2.4 million, the most any of Bucks County's municipalities paying the city $9 million on its wage tax.

Ramey told supervisors that a bill by state Sen. Frank Farry, the township's new Senate representative, was getting attention.

Farry's Commuter Tax Fairness Act was approved by the state Senate and is now in the state House of Representatives for consideration.

"Any kind of pressure we can put on anyone would be great," Ramey said.

Other Bucks County towns that have supported the measure include Bensalem, Newtown Borough, and Newtown Township.

The city wage tax of 3.44 percent is imposed on salaries, wages, commissions, and other compensation paid to employees working for a Philadelphia employer. Non-residents —even those who work remotely —are forced to pay the full Philadelphia City Wage Tax if their employer is based in the city.

During a March public hearing, Farry revealed that Bucks County municipalities are shortchanged close to $10 million annually as a result of the act.

The Sterling Act, enacted in 1932 to assist Philadelphia following the depression, is Pennsylvania’s first local income tax enabling legislation and grants the City of Philadelphia broad taxing authority.