Income Tax

Income Tax

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INCOME TAX

Theincome tax has always been a major source of revenue for the Federalgovernment. In fact, 59% of the total receipts from tax stem fromcorporations and individuals[ CITATION Wil15 l 1033 ]. Income tax isusually structured in a manner that allows for fairness and equalityin the distribution of national wealth. The taxable income forPennsylvania local income tax includes various components apart fromthe basic salary. Proceeds from the sale of real estate, jury dutyfees, cancelled debts, unemployment compensation, pensions, andannuities are included as taxable income. Additionally, lotteryearnings, alimony payments, bartering income, stock profits, contestearnings, severance payments also contribute to taxable income.However, some incomes are allowable against taxable income. Suchincomes include tax refunds, compensation for bodily injuries,welfare benefits, child support, scholarships, inheritances, and lifeinsurance payments (Hoffman et al., 2015). Lack of compliance on thepart of taxpayers results in various forms of penalties. Furthermore,interest is also applied with respect to underpayments andoverpayments.

Rate in Local Municipality

Theindividual income tax rate in the State of Pennsylvania is 3.07%while the unemployment insurance lies at 0.07%. However, inPittsburgh City, the local income tax rate is 1% for both residentsand non-Pennsylvania residents. This recognizes the fact that allresidents accrue their incomes from the same municipality facilities.

Local Entities and Share of Local Tax Rate

InPittsburgh City, various entities benefit from the local income taxcollections. For example, administration and facility improvementseach receive 13% of the local tax. Moreover, engineering andconstruction projects consume a colossal 53% of the local tax.Neighborhood and community development receive 12% that includespayments made to local consultants for feasibility studies. Theacquisition of capital equipment and vehicles utilizes 7% of the taxrate. A meagre 2% is spent on public safety during the demolition ofcondemned buildings (City of Pittsburgh, 2015). The Mayor`s officehandles managing the expenditure and provide the necessary checks andbalances.

References

Hoffman, W. H., Maloney, D. M., Young, J. C., Nellen, A., &amp Raabe, W. A. (2015). South-Western Federal taxation: Individual income taxes. Boston, MA: Cengage Learning.

City of Pittsburgh. (2015). Operating Budget. Retrieved from: http://www.post-gazette.com/attachment/2015/09/22/City-of-Pittsburgh-Operating-Budget-2016.pdf