LACKAWANNA TAX FACTS

So just how bad are local taxes in Pennsylvania? Very bad! Here's a list of the problems:

1. Pennsylvania's local taxes violate elemental fairness. Most and maybe all of the local taxes used in the state are regressive. Lower income taxpayers pay them at a higher rate than do higher income taxpayers. The so-called nuisance taxes are the worst offenders here, followed closely by the wage tax and then property taxes.

2. Pennsylvania's local taxes are hard to administer and expensive to collect. Most of the nuisance taxes are hard to administer and expensive to collect. Some estimates are that it costs as much as ten times more to collect these taxes compared to the cost of collecting income or even sales taxes.

3. Pennsylvania's local taxes are inadequate to fund schools and local government. Economists use the term "inelasticity" to describe taxes such as the property tax and the nuisance taxes. They don't grow with the rest of the economy, and so rates have to be raised frequently just to keep up. A related problem is the inequity in tax revenues that grow over time among local governments, though while worse for property taxes remains a serious problem for the use of Act 511 taxes.

4. Pennsylvania's local taxes are complex and confusing to most taxpayers. The property tax with its archaic mileage rates and assessment ratios is difficult enough to fathom, but who can explain the difference between the occupation tax and the occupation privilege tax? Could anyone explain what it means when the occupation tax may be based on a "millage applied against the assessed value of occupations?" And then there is the wage tax. In some areas the school district and municipality share it - and taxpayers are actually expected to file two separate wage tax returns.

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Emergency and Municipal Services Tax [EMS Tax]

Act 222 of 2004 amends the Local Tax Enabling Act, Act 511 of 1965, to permit municipalities and school districts (except the Pittsburgh School District) whose taxing authority derives from Act 511, to impose on persons employed within the jurisdiction a combined Emergency and Municipal Services Tax (EMST) of up to a maximum of $52 a year beginning on and after January 1, 2005. This tax replaces the occupational privilege tax (OPT) and can be imposed any time during the fiscal year. Municipalities must use funds from an EMST for police, fire or emergency services; road construction or maintenance; or for the reduction of property taxes. This limitation does not apply to school districts.

Local Wage Taxes [Earned Income Taxes]

The amount an individual pays in local wage taxes is determined by his/her place of residence. This tax is imposed upon salaries, wages, commissions, and other compensation earned by individuals and upon net profits earned from all business and other activities relating to earned income. Wage taxes are limited to 1% of total compensation (0.5% to the municipality and 0.5% to the school district) in all Lackawanna County communities except the City of Scranton and the City of Carbondale. Scrantonians pay a 3.4% wage tax (2.4% to the city and 1% to the school district) and residents of Carbondale pay 1.75%.

Real Estate [Property] Taxes

The amount you pay in annual real estate taxes will of course vary depending on the size, condition and purchase price of the home, as well as, the municipality where the home is located. The following ranges will give you a rough idea of the amounts you can expect to pay:

$750 to $1,500 - older home, probably located on small lot in established neighborhood.
$1,500 to $2,500 - newer split-level, bi-level or large ranch, on decent-size lot (1/4 to 1/2 acre)
$2,500 to $4,000 - modern four-bedroom home (2,000 to 2,500 square feet) on 1/2 to 3/4 acre
$4,000+ - executive level, large home on large suburban lot, 4+ bedrooms

Be advised that Lackawanna County has not undertaken a countywide reassessment since 1968. The County uses a "common-level ratio" formula to determine real estate tax assessments. Many area residents have appealed and been successful in lowering their initial real estate tax assessment after acquiring or building a new home.