Pittsburgh considers tax on unearned income to plug budget gap

Summarised from 2 outlets · Updated 31 Oct, 11:30 · Archive

Pittsburgh is proposing a two per cent tax on unearned income to help plug a budget shortfall.

Pittsburgh is facing a significant budget gap as the city prepares its capital budget. Mayor Corey O'Connor's proposed budget relies on drawing $27 million from the city's rainy day fund to avoid tax increases, but officials warn the fund could be depleted within five years if deficits continue to grow.

In response, Councilwoman Barb Warwick has proposed an alternative to traditional tax increases. Rather than raising property or payroll taxes, she has suggested implementing a two per cent tax on unearned income. This would apply to passive income streams including rent, royalties, capital gains, copyrights, patents and trusts, though it would not cover pensions and retirement benefits.

According to research by the Keystone Research Center of Harrisburg, the tax could generate approximately $51 million annually. This would be enough to cover the amount being drawn from the rainy day fund in 2027 and potentially allow for either offsetting budget cuts or replenishing reserves. The key question facing the city is whether such a tax would provide sustainable revenue long-term or discourage residents with unearned income from remaining in Pittsburgh.

How it is being reported

• Editorial: Will unearned income tax save Pittsburgh’s budget?Pittsburgh has a money problem.TribLIVE · 31 Oct, 09:00
• Brandon McGinley: Is Pittsburgh allowed to tax unearned income?Pittsburgh Post-Gazette · 29 Oct, 12:30

In this story: Pittsburgh · Corey O'Connor · Barb Warwick · Keystone Research Center · Harrisburg

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