The question has been asked several times, "What is the difference between EIT and PIT." EIT is short for Earned Income Tax. PIT is short for Personal Income Tax.
With EIT you are taxed on items such as: salaries, wages, commissions, bonuses, stock options, incentive payments, fees, tips, and net profits from a business. Basically, you are taxed on any money you earn.
The PIT taxes everything included in EIT, but also includes items such as: interest, dividends, capital gains, rents, gambling, and lottery winnings. In other words, it includes all of your earned income plus any income you received, but didn’t work for.
Neither EIT nor PIT taxes Social Security payments or retirement pension payments.
At least one local school district is considering the PIT. Homer-Center school district is proposing a personal income tax rate of 1.3%. The real estate tax reduction will be between $202 and $225. This will replace their current EIT.
Using the spreadsheet I created for the Act 1 Analysis, we can’t really determine what is best for you because they currently have an earned income tax. However, I will say most older people that have “unearned” income will pay more in the way of taxes. The only people that will be better off are those that don’t make much money and don’t own a “valuable” house or property.
With a PIT usually investors/savers are penalized the most. Therefore, you can guess why I am against a PIT. Why tax the people that have spent years investing their money for a secure future rather than blowing it on frivolous things of everyday life.
In my opinion, the only way ANY of these taxes will be approved is if the voters don’t truly understand what they are voting for! But don’t rely on what I say; run the numbers yourself, it’s easy.
Please, pass this blog link on to your friends and family living in Pennsylvania.
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