W. Marlborough adopts earned income tax

Residents argue against new tax, saying it falls unfairly on working people

By Mike McGann, Editor, The Times
WEST MARLBOROUGH — Over sometimes vociferous objections from residents in attendance, the township’s Board of Supervisors adopted an earned-income tax Monday, making it the fourth municipality in the Unionville-Chadds Ford School District to adopt such a tax.

Residents argued that the new tax, .5% of earned income or profits from non-incorporated businesses, falls unfairly on wage-earners — especially agricultural workers who live elsewhere and can least afford it, while many wealthy landowners who live on investment income would see no increase. Supervisors said that to generate the same amount of money, local real-estate taxes would need to be doubled, which they deemed excessive. They justified the move on the basis of reduced revenue from transfer taxes, reassessment of property, and the depletion of fiscal reserves due to recent litigation.

The current total annual budget of the township is between $300,000 and $350,000. About $120,000 is collected through real-estate taxes. The new earned-income tax is expected to raise $100,000 annually.

Supervisors made it clear that they felt that revenue issues were structural in nature — and not  just a short-term issue caused by litigation and hearing costs associated with The Whip Tavern parking controversy and other zoning issues. They also cited the need to spend some $80,000 to make repairs to Rokeby Road, which is suffering from an erosion problem.

“This is a fairly modest rate, a modest amount for people who work in the township,” supervisor Michael Ledyard said.

Part of the problem in forecasting revenue from year to year, supervisors say, is with very few, but very pricey properties in the township — which has a population of less than 900 and is the only municipality in the county to see a drop in population between 2000 and 2010 — transfer tax can wildly fluctuate, depending on whether a high-value property sells in a given year.

“A huge amount of the budget is unpredictable,” Supervsors chair William Wylie said. “And right now, we have no cash reserves.”

Wylie said the township doesn’t like to borrow money to buy equipment, preferring to save for it, and doesn’t keep the reserve funds other neighboring townships do as required by lenders.

“We run this very close to the vest,” Wylie said.

But residents were not swayed by the arguments — either objecting to the concept or, at minimum, asking that supervisors add a sunset provision to the ordinance, which would cause the tax to expire at a later date. Some even offered to give the township money in lieu of the tax increase.

“The people who are going to pay the most are those who can afford to pay it the least,” said Berta Rains, offering to pay an assessment instead.

Although supervisors briefly considered delaying adoption – supervisor Hugh Lofting initially suggested that there were some aspects that he was unsure about – the sunshine provision didn’t seem to get any traction. Supervisors said that the tax will be looked at annually and if not needed, would be eliminated.

“If we get to the point where we don’t need it, we’ll repeal it,” Ledyard said.

Supervisors said they weren’t happy about the move but felt they had little option.

“We would like to minimize the tax burden,” Wylie said. “But that doesn’t allow us to engage in wishful thinking.”

The township became the third municipality in the school district with an earned-income tax. Pocopson adopted its tax in 2010; Newlin and Pennsbury also have an EIT.

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