PITTSBURGH \u2014 Pittsburgh leaders\u2019 newest idea to plug their massive budget hole was already facing doubts about its legality within hours of being introduced.<\/p>\n
Councilwoman Barb Warwick formally announced her proposal to tax unearned income<\/a> Tuesday, which was designed to deliberately target the city\u2019s wealthiest residents.<\/p>\n The tax would impose a 2% levy on investment dividends, estate and trust disbursements, capital gains from property sales and rental income.<\/p>\n The tax exempts retirement, sick and disability benefits, as well as death benefits and gifts.<\/p>\n Warwick and researchers predicted the tax would generate $51 million per year and avoid a sales tax increase that has been discussed, which would primarily impact lower-income residents.<\/p>\n \u201cUnder the city\u2019s 1% wage tax, salaried and hourly workers in Pittsburgh are taxed on every dollar they bring home,\u201d Warwick said. \u201cOur wealthiest residents, on the other hand, who receive income from investments and other non-salary sources are not taxed by the city on that additional income at all.\u201d<\/p>\n Warwick added that lower-income residents pay a greater percentage of their total income to taxes than wealthy residents, a tax model that\u2019s known as regressive \u2014 and primarily powered by sales taxes.<\/p>\n Pittsburgh Mayor Corey O\u2019Connor told WPXI that he was not aware of the proposal before it was announced in the council meeting agenda.<\/p>\n PREVIOUS COVERAGE >>> Pittsburgh mayor submits 2027 preliminary budget, 5-year plan to City Council<\/a><\/p>\n He also said he wouldn\u2019t be counting on the income as his team puts together their next budget.<\/p>\n \u201cWe just have questions of the legality but also how we would operate something if passed,\u201d he explained.<\/p>\n O\u2019Connor also responded to a question about residents feeling like they were being bombarded by cost-of-living increases, after both Duquesne Light Company<\/a> and ALCOSAN announced rate increases<\/a> last week. Renters also told Channel 11 they were worried the tax on landlords would be passed on to them.<\/p>\n \u201cEverybody is always looking for different means of revenue but there\u2019s only so many times you can go back to taxpayers and I think that\u2019s why we have a growth mentality,\u201d he replied.<\/p>\n The chairman of the Republican Committee of Allegheny County also spoke out against Warwick\u2019s proposal, echoing O\u2019Connor\u2019s statements that the city needed to focus on growth.<\/p>\n \u201cThe new tax being proposed by city council is just another way of penalizing individuals that are already overtaxed,\u201d Brian Weismantle said. \u201cCouncil needs to look for ways to decrease spending as a way to balance the budget.\u201d<\/p>\n Download the FREE WPXI News app<\/a> for breaking news alerts.<\/p>\n Follow Channel 11 News on Facebook<\/a> and Twitter<\/a>. | Watch WPXI NOW<\/a><\/p>\n TOP STORIES FROM CHANNEL 11 NEWS <\/p>\n \u00a92026 Cox Media Group<\/p>\n