Local Income Tax

Local Income Tax

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LOCAL INCOME TAX

LocalIncome Tax

LocalIncome Tax

Federalgovernments in most states and local governments impose income tax onindividuals, corporations and selected fiduciaries[ CITATION Wil15 l 1033 ].Taxable income is not exclusive to the annual salary but alsoincludes profits from stocks, real estate sales, or even lotteryearnings. Income such as life insurance proceeds, inheritances, childsupport, welfare benefits, federal income tax refund, scholarships,and even compensation for physical injury are not identified astaxable income but are included in the gross income. Therefore,taxable income inclusions include wages and salaries, pension andannuities, unemployment compensation, bartering income, alimony,cancelled debts, constructively received income, and also jury dutyfees. The money an individual may embezzle is also considered astaxable income in the year the money was embezzled (Hoffman et al,2015). Royalties and license receipts, freelancer income, severancepay, and awards, prizes and contest earnings are also considered astaxable income.

LocalIncome Tax Rate in Municipality

The State ofPennsylvania has a flat individual income tax rate of 3.07%. thismeans that for every dollar an individual earns, the tax rate is3.07%. In the city of Philadelphia, the income tax rate is set at3.9102% for the local residents and 3.4828% for the non-residents.

Entitiesand Share of Local Tax Rate

Various entities benefit from the local income tax rate. Thecommuter service provided by the city benefits from the tax since anumber of non-residents use these services to get to work. Otherdockets such as security, health, and sanitation entities alsoreceive a share of the local tax rate. The local amenities such asstadia, libraries, museums, among others also receive a share of therevenue collected. The percentage allocation to each docket rangesbetween 0-35% of the total collected. For instance, the Mayor’soperating budget has allocated about 33% of the city’s budget tothe Public Safety department for the 2015-2016 fiscal year. Thehealth and opportunity department on the other hand, has received 11%of the total revenue collected. The Economic Development, Arts andCulture department has been allocated 0.80% of the city’s budget.

Reference

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.