County Income Taxes Still Sluggish

According to the Comptroller’s electronic message, fourth quarter local income tax distributions total $986.1million, a 4% increase over prior year.  The distribution is based on withholding and estimated tax payments attributable to the fourth quarter of calendar year 2011 which were received and processed by January 31, 2012, along with late third quarter withholding receipts.

Although the distribution increased slightly, other factors indicate sluggish growth.

Fourth quarter withholding receipts declined by 1.0%, while estimated payments increased by only 0.9%.  Total receipts fell 0.6%.  Official statistics indicate that employment in the State increased 0.8% in the fourth quarter; a decline in withholding certainly seems peculiar in the context of rising employment, as it implies declines in wage and salary income.  Average hourly earnings did decline 0.6% in the fourth quarter, although that was a smaller decline than the rest of the year, and it does not necessarily imply anything about aggregate wage income.  While
there may be timing issues with respect to withholding collections, a 1.0% decline for the quarter clearly is not encouraging, and may indicate that the economy is softer than other statistics suggest.

If you have any questions about the February 28 distribution, please contact Bill Blum of the Revenue Administration Division at (410)260-7501.

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