Easton Commuter Tax Issue Undecided

It seems a proposed increase of the Easton's Earned Income Tax (EIT) aimed at raising revenue from the city's commuters is nearly universally unpopular.

The proposal would 0.75 percent in addition to whatever EIT their own municipality imposes. Currently, residents are subject to a 1.75 percent EIT. The new tax would affect approximately 10,600 people.

A handful of commuters and city residents said the new tax would fail to achieve the city's aims, and would discourage more business in the city.

Speaking on behalf of Wolper Information Services, Adrian Shanker, of Bethlehem, said commuters buy lunch, fill up their gas tanks and patronize other businesses in the city, all of which may cease if the the commuter tax is implemented.

“We may not live in Easton, but we all spend money in Easton and thus contribute to the city's tax base...It is unfair to ask employees who already contribute to the local economy and tax base to pay additional taxes,” Shanker said. “This proposal will do a disservice to businesses already located in the city at a time when Easton should be incentivizing businesses to move to and stay in the city.”

His sentiments were echoed by co-worker Ashley Hope.

“I feel if we could develop ways to bring more business in to the city...there's a lot of opportunities to bring more revenue into the city without raising taxes,” she said.

Armand Christopher, of Stockton, N.J., a partner at USA Architects located on the seventh floor of the city-owned Alpha Building said the tax would be a real burden for the 19 people employed by the firm, coming at a time when pay cuts were just restored by the firm and raises were not even on the horizon.

“This commuter tax is in essence a pay cut,” Christopher said. “We sympathize with your problem, but my company has no iron-clad reason to remain in the city.”

Commuter Mitch Miller, of Allentown, was more blunt.

“I oppose it for the simple reason of 'no taxation without representation,'” Miller told council members. “I'd like to tax people that walk past my house, but I can't.”

Easton resident Drew Anderson was the only member of the public to speak in favor of the tax, but said the city should also tax telecommuters and require public employees to live in the city.

“Those in the public sector need to take a hard line and tell employees they need to live where they work,” he said. “You need to take more aggressive steps and take it to the next level.”

Mayor Sal Panto and city administrators say the commuter EIT is likely the least painful way to raise most of the needed funds to cover a projected $1.5 million shortfall in 2013 for increased city worker pension funds. The alternative is raising property taxes or the city's business privilege tax rate, they said.

State law allows the tax to be implemented by 'moderately distressed' municipalities, of which Easton is one, and the funds from the new EIT must be used for covering municipal pension costs.

“We can't raise taxes on residents any more,” Panto said. “The only thing we could think of was what other cities have done, and that's a commuter tax.”

City Finance Administrator Chris Hegele said the tax would cost the average non-resident employee $127.18 annually, and an employee making $25,000 would pay $3.61 per week.

“At least it's tied to income and it's tied to growth,” Panto said.

Hegele estimated the tax would raise $1.35 million annually, a number he said was derived from looking at the number of employees from various areas and comparing that to how much each would contribute. In municipalities whose own EIT exceeds 1 percent, Easton would collect the difference between that and 1.75 percent, meaning in many cases the city would not realize the full 0.75 percent of the commuter tax.

City council members said they were undecided about the proposal, but some seemed like it might be reluctantly embraced.

“I know this is going directly to pensions, but it frees money up in the general fund to support (programs like Main Street, the Ambassadors and Weed & Seed),” Councilman Mike Fleck said.

Councilwoman El Warner said she was 'on the fence' about the proposed tax.

“There's one day a year I'm a Republican, and that's the day I pay my taxes,” she said. “We impact people when we make these decisions, and they're hard decisions to make.”

Councilmen Ken Brown and Jeff Warren both said they want to see more financial information before they make a decision.

Warren added he feels the tax might not have the desired effect, especially when the city is hoping to partner with other local municipalities, which would encourage commercial development in exchange for reduced property taxes for years.

“In a sense, we're being hypocritical,” Warren said.

“I really struggle with this one,” said Councilman Roger Ruggles. “It doesn't seem like a fair exchange to tax people who have nothing to say about it.”

Though it's his proposal, Panto said he is unsure as well.

“I'm not completely sold on this...but right now, it's what the state allows,” the mayor said. “The foolish thing is to let it go and let my grandchildren pay $100 million in taxes. Someone has to take responsibility.”

City officials said they expect to vote on the matter sometime in May.