State limits Sharon’s out-of-state wage tax

Ohio cities can make Pennsylvanians pay their wage taxes.

STAFF REPORT

SHARON, Pa. — City council will take another vote to raise property tax millage from 21.5 to 26.5 mills.

Council is expected to have the first of two readings on the millage increase at its Thursday meeting, said Sharon Mayor Bob Lucas.

Council just approved the 21.5 mills, down from 39.5 mills, in the budget it enacted Jan. 5.

But the millage drop was offset by a rise in the city’s wage tax from 1 percent to 2.25 percent. After council approved the budget and the wage tax increase, the city discovered the state would not allow it to collect more than 1 percent in wage tax from out-of-state residents.

Without being able to raise the tax for workers who live in Ohio, the city would lose $500,000 of the $900,000 the increase would have generated, Lucas said.

The mayor said Ohio cities can tax Pennsylvania residents who work across the state line. Pennsylvania residents who work in Youngstown pay its wage tax of 2.75 percent.

Lucas also said people who work in Sharon but live elsewhere in Pennsylvania will continue to pay the wage tax of their own communities.

Lucas said the city found out about the problem after it submitted its new budget ordinance to Central Tax Bureau of Pennsylvania in Ellwood City, which collects Sharon’s wage and emergency services taxes.

“Basically an hour later, the accountants called us and said the ordinance doesn’t seem correct,” he said.

Lucas said he confirmed with the state that the city couldn’t charge more than 1 percent for Ohio residents.

He said Pennsylvania should be able to tax Ohio residents at the same rate Pennsylvanians are taxed in Ohio. He said he would like to see a legislative change to allow that.