The very same Jake Pawlak who served the prior mayoral administration as city budget director and essentially pooh-poohed any concerns that city finances were a wreck, now, as Pittsburgh director of strategic policy initiatives for the far lefties at the Keystone Research Center, has become one of the shillers-in-chief for a proposed new 2 percent tax on unearned income to help bail out the wreck he pooh-poohed.
Go figure.
Barb Warwick is the city councilor behind the 2 percent tax, dubbed the “Fair Share Tax.” With that name, the intimation, of course, is that those with unearned income – from investments and what not that the “rich” enjoy – don’t pay their fair share in taxes. This is the same crowd that attempts to buttress this line of illogic by noting that those doggone “Richie Riches” typically pay a lower percentage of taxes on their income than do the poor, overtaxed working stiffs. Conveniently forgotten is that those with higher incomes clearly pay the lion’s share of income taxes on a dollar basis.
Do the math.
Former Allegheny County Chief Executive Rich Fitzgerald (on Larry Richert’s KDKA Radio morning show on Tuesday) matter-of-factly addressed the giant legal elephant in the room regarding implementation of the “Fair Share Tax”: It would take an act of the state Legislature to authorize such an impost on unearned income, he says.
Period.
As Tribune-Review reporter Julia Burdelski wrote this past week:
“A 2024 legal opinion by then-City Solicitor Krysia Kubiak said Pittsburgh ‘is neither explicitly permitted to impose nor explicitly prohibited from imposing an unearned income tax.’
“The memo …said imposing such a tax could lead to litigation.
“‘The City’s ability to impose a tax on unearned income like capital gains is not settled law, and the City has no explicit authority to do so,’ the legal opinion said.
“The law department said the city’s authority to tax unearned income ‘is even less settled than the city’s authority to impose the facilities usage tax,’ a fee on out-of-town professional performers and athletes that the Pennsylvania Supreme Court struck down last year.”
That assessment doesn’t even raise the “Fair Share Tax” to shaky-ground status.
Then there’s Philadelphia municipal lawyer Richie Feder, who appears to have become the “Fair Share Tax” crowd’s de facto legal beagle for the cause. “This tax comfortably fits within Pittsburgh’s taxing authority and does not present any legal difficulties,” he claims.
Never mind that the state Department of Community and Economic Development clearly states that a new tax on unearned income in Pittsburgh is not now legally permissible. By state statute (and not local government fiat), only Philadelphia can impose an unearned income tax and the proceeds go exclusively to Philadelphia’s school district.
But, per Feder, we should pay no attention to the law that he appears to want to hide behind a curtain.
As Eric Montarti, research director at the Allegheny Institute, told the Trib this week, the City of Pittsburgh already raised property taxes by 20 percent this year and collects a higher earned income tax than neighboring areas.
“Adding a tax is going to make the attractiveness of the city even less so,” he said.
And between onerous city and Allegheny County tax hikes and continually new, regressive regulations, Pittsburgh, it’s population and economy in a perpetual state of funk, is gaining a reputation as a place to avoid at all costs – because the cost to live and do business here has spun out of control and with no end in sight.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
