An analysis of taxpayer attitudes toward a local income tax to support public schools

Abstract

While states have traditionally relied almost solely upon local property taxes for the main support of public education, other revenue sources have included sales, bank shares and occupational taxes at the local level. With the passing of the Local Tax Enabling Act in 1965 at the state level, most Pennsylvania school districts were empowered to collect non-real estate taxes (General Assembly of the Commonwealth of Pennsylvania, 1965). On November 11, 1986, an earned income tax resolution was approved and adopted by the Township of Upper Dublin with an effective date of January 1, 1987. On June 1, 1993 the School District of Upper Dublin and the School Board of Directors followed suit and approved and adopted an earned income tax resolution. Currently, all School District of Upper Dublin residents pay a one-percent earned income tax (Lukoff, 1986). The earned income tax revenues are shared equally between the township and school district. The major aim of this study was to assess real estate property taxpayer attitudes in the School District and Township of Upper Dublin towards the earned income tax. More specifically, did taxpayers believe that the earned income tax held steady, or reduced, real estate property taxes? The study employed one primary data collection strategy: a questionnaire mailed to a random sample of real estate property taxpayers in the School District of Upper Dublin. This methodology allowed the researcher to gain a more thorough understanding of the issue and to collect both quantitative and qualitative data. The study revealed that taxpayers in the school district and township did not generally believe the earned income tax had reduced and/or held steady real estate property taxes. When the tax was instituted two decades ago, reducing real estate property taxes was one purpose, as was finding an additional source of revenue for the school district and township. Additionally, taxpayers in the study viewed the earned income tax as a "good" or "fair" tax and certainly recognized the purpose of the tax to fund education and township services via another source of revenue. Accordingly, school district and township officials must recognize that taxpayer's feelings translate into implications for public policy. These implications include recognizing the mistrust and misinformation associated with the tax and developing a better informed public. Officials must recognize that taxpayers seem to believe that the earned income tax is a "good" and/or "fair" tax, but are required to pay it like any other tax.