PITTSBURGH — Pittsburgh leaders’ newest idea to plug their massive budget hole was already facing doubts about its legality within hours of being introduced.
Councilwoman Barb Warwick formally announced her proposal to tax unearned income Tuesday, which was designed to deliberately target the city’s wealthiest residents.
The tax would impose a 2% levy on investment dividends, estate and trust disbursements, capital gains from property sales and rental income.
The tax exempts retirement, sick and disability benefits, as well as death benefits and gifts.
Warwick and researchers predicted the tax would generate $51 million per year and avoid a sales tax increase that has been discussed, which would primarily impact lower-income residents.
“Under the city’s 1% wage tax, salaried and hourly workers in Pittsburgh are taxed on every dollar they bring home,” Warwick said. “Our wealthiest residents, on the other hand, who receive income from investments and other non-salary sources are not taxed by the city on that additional income at all.”
Warwick added that lower-income residents pay a greater percentage of their total income to taxes than wealthy residents, a tax model that’s known as regressive — and primarily powered by sales taxes.
Pittsburgh Mayor Corey O’Connor told WPXI that he was not aware of the proposal before it was announced in the council meeting agenda.
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He also said he wouldn’t be counting on the income as his team puts together their next budget.
“We just have questions of the legality but also how we would operate something if passed,” he explained.
O’Connor also responded to a question about residents feeling like they were being bombarded by cost-of-living increases, after both Duquesne Light Company and ALCOSAN announced rate increases last week. Renters also told Channel 11 they were worried the tax on landlords would be passed on to them.
“Everybody is always looking for different means of revenue but there’s only so many times you can go back to taxpayers and I think that’s why we have a growth mentality,” he replied.
The chairman of the Republican Committee of Allegheny County also spoke out against Warwick’s proposal, echoing O’Connor’s statements that the city needed to focus on growth.
“The new tax being proposed by city council is just another way of penalizing individuals that are already overtaxed,” Brian Weismantle said. “Council needs to look for ways to decrease spending as a way to balance the budget.”
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