Exactly how much remains uncertain.

The income-tax hike approved Tuesday by the House would boost the rate to 3.25 percent from the current level of 2.8 percent, beginning on Jan. 1. On July 1, the rate would drop slightly to 3.1.

While Senate leaders say that proposal doesn't stand a chance in their chamber, you might be asking yourself, "How would this affect me?''

Here are some answers.

Q: How much more will I pay?

That depends, obviously, on how much you make.

In Lancaster County, the median taxable income is about $26,000, according to the state Revenue Department. In 2002, that person paid $728 in income taxes to the state. Under the proposed tax increase, that worker would pay $97.50 more, for a total of $825.50.

The net effect of the proposed tax plan is an increase of 13.4 percent in 2004. To figure out how much in state incomes taxes you would pay next year, grab a calculator and multiply your income by 0.03175.

Someone who earns $35,000 now pays $980, but next year would pay $1,111, an increase of $131. Someone who earns $50,000 now pays $1,400, but next year would pay $1,587.50, an increase of $187.50.

Q: How would that affect my tax returns in April?

Not at all.

Because the proposed tax increase would not take effect until Jan. 1, you wouldn't have to do all this math on the paperwork you file with the state in April. Those returns cover your financial information for 2003 only.

You would, however, notice your employers withholding more money from your paycheck beginning in January, and see the increase on the tax returns you will turn into the Revenue Department in April 2005.

Q: What if I don't make a lot of money?

If you're single and make $6,500 or less, you wouldn't have to pay the income tax. If you're married, and the total income between both you and your spouse is $13,000 or less, you wouldn't have to pay anything.

Those allowances for the working poor would not change.

If you've got children, however, you could make an additional $9,500 for each and still not have to pay the state income tax. That means a family of four -- a mom, dad and two kids -- making $32,000 or less would owe the state no income taxes.

Those poverty exemptions for dependents, if approved by the Senate and signed by Rendell, would represent a small increase over the state's current rules. Now, the exemption for dependents is $8,500 each, meaning that a family of four can earn only $30,000 or less a year before they must pay taxes.

Q: What's the big picture?

The roughly 225,000 people in Lancaster County who file tax returns with the state would pay a total of $34 million more in income taxes in 2004 than they did in 2001, based on Revenue Department figures.

Wage-earners here paid $253.5 million to the state in 2001 -- the latest income-tax figures available -- and would contribute $287.4 million in 2004 under the proposed increase.

Statewide, the increase would generate about $1 billion in 2004 -- an estimated $600 million in the first six months of 2004, and about $375 million in the last six months. The 3.1 percent tax rate, which would only take effect in July, would raise $750 million annually.

Q: Where would the money go?

The income-tax increase is part of a package of bills that would set aside $450 million for new education programs and restore about $500 million cut from drug and alcohol programs and mass transit.

To pressure the Republican-controlled Legislature to consider those plans, Rendell has held up more than $4 billion in public education subsidies, forcing districts to go without state aid thus far.

Those education dollars, plus about $200 million in grants that schools could put toward Rendell's initiatives, were passed in the package.

Q: What about the property-tax relief everyone had been talking about months ago?

It's not completely dead.

Rendell originally sought a 34 percent income tax hike -- from 2.8 percent to 3.75 percent -- to raise about $2.2 billion to lower property taxes, increase education spending, and fill budget gaps.

But that proposal faced stiff opposition in the Legislature.

If you're going to see any property-tax relief now, the Legislature would have to legalize slots at racetracks and use those revenues for those reductions under the House-approved package of bills.

If the Legislature approves a slots bill, and gambling generates $600 million, school boards could lower school property taxes only if voters agree to increase their earned income tax by a tenth of 1 percent.

Q: What are the chances of the above-mentioned income-tax increase being approved?

Apparently, not good.

Senate leaders are already attacking it, and are working to forge a compromise.

"Our sense is that it's too much in taxes and too much in spending,'' said Senate Majority Leader David J. Brightbill, a Republican from Lebanon who represents a small section of northern Lancaster County.

Sen. Vincent Fumo, a Democrat from Philadelphia, was quoted in the Pittsburgh Post-Gazette as saying he doubted the bill would receive final action by the Legislature before the Nov. 4 election.

Which means school districts across the state will have to keep waiting for the state education subsidies.

(This report contains information from The Associated Press.)


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