Week of December 7, 2015
Bills Signed into Law by the Governor
Ralph Backenstoes Receives ALS Practitioner of the Year Award
PennDOT State Farm Safety Patrol Assists Motorists
The list of expressways includes:
Nearly 11% percent of the cost of the patrol is offset by a Public-Private Partnership (P3) sponsorship with State Farm, and helps offset the roughly $4 million annual cost to operate the service. In 2014, the patrols assisted 22,281 motorists.
Column : The Failures of Local Tax Reform
In response to these concerns, Senator Argall and I worked to correct the deficiencies of HB 76. We met with opponents to hear their concerns. We studied Independent Fiscal Office analyses and dissected pages of comments from the PA Department of Revenue on the bill as originally drafted. Prior to the Senate vote, SB 76 was further refined to ensure it’s technically correct and works. It is and it does.
To eliminate school property taxes requires nearly $13 Billion in replacement revenues. There are just four alternatives to raise the $13 Billion to eliminate school property taxes: Personal Income Tax (PIT), Earned Income Tax (EIT), Sales & Use Tax, and/or another (new) tax. Three of these four options are incorporated into SB 76: PIT, Sales, and EIT.
To eliminate school property taxes, SB 76 proposes a combination of changes in Sales and Personal Income Taxes. The Sales Tax would be broadened and expanded to 7% and the PIT would be increased from the current 3.07% to 4.95%. Locally, schools could raise additional funds through either a local PIT or EIT – after voter approval.
I prefer Sales Taxes to replace school property taxes because I believe people have some control over paying consumption taxes, more people pay Sales Taxes than those paying property taxes, and the Sales Tax is paid with each purchase while property taxes are large bills.
Increasing the Sales Tax rate to 7% (8% in Pittsburgh and 9% in Philadelphia) and expanding the base (food items not on the WIC list, clothing over $50, and certain services) would raise about $6 Billion in replacement revenues. Raising the PIT from 3.07% to 4.95% would raise another $7 Billion in replacement revenues to eliminate school property taxes.
To calculate how proposed SB 76 changes would impact you, compare what you now pay in school property taxes to what you would pay under an expanded PIT and Sales Tax. For the latter, you would need to spend an additional $14,285.71 in newly taxable items for each $1,000 you now pay in school property taxes.
Like any tax, shifting from one tax to another has different impacts on different taxpayers. SB 76 opponents focused on this. Unfortunately, they offered no alternatives, simply promising to “continue to offer our expertise and assistance to develop a responsible approach to address concerns where it is most needed, using sustainable and proven strategies.” Opposing SB 76 with no alternatives means you support the status quo.
Total elimination of school property taxes is hard – especially with just four options for equal revenues. It’s why elimination has proven to be so elusive for so long.
Act 511 was passed 50 years ago to reduce the burdens of school and municipal property taxes through a myriad of other taxes, including: amusement taxes, mercantile and gross receipts taxes, business taxes, realty transfer taxes, per capita taxes, personal property taxes, occupation and occupation privilege taxes, and local Earned Income Taxes. These taxes proved equally unpopular and were changed or repealed over time while school taxes continued to increase.
In 1987, Governor Casey and the General Assembly sent voters a bipartisan plan to reduce reliance on property taxes through expanded wage taxes, optional personal property and county Sales Taxes, Realty Transfer Tax for municipalities, municipal service fees, property tax millage restrictions, and payments for tax exempt properties. That plan was overwhelmingly rejected by the voters statewide by a margin of over 4 to 1.
During the Rendell Administration, gaming and a subsequent expansion of gambling was promised to reduce property taxes by a minimum of 20%. It didn’t, it hasn’t, and it never will.
Rather than focusing on the merits of total elimination of school property taxes, opponents focus on the tax shift of SB 76. However, unlike the House debate, the arguments against SB 76 concentrated on policy rather than technical issues.
All the rhetoric against SB 76 doesn’t change the fact it works and the numbers add up. Those who support eliminating school property taxes support SB 76. Those who oppose SB 76 – or say there’s a better plan – should now step forward. Otherwise, you’re supporting the status quo, which has prevailed for far too long. We’re waiting for your plan.
When contacting my office by e-mail, mail, or telephone, please be sure to share your e-mail, telephone number, and address so that we can follow up with you in a timely manner. Many inquiries can be handled with a phone call or email.
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101 Municipal Building