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3/10/2015 6:04 am  #1


Property tax ‘reduction’ and ‘elimination’

EDITORIAL: Property tax ‘reduction’ and ‘elimination’ are two different things

http://www.pottsmerc.com/opinion/20150309/editorial-property-tax-reduction-and-elimination-are-two-different-things

Sometimes, it is the idea that sounds almost reasonable that can turn out to be the most dangerous. And so, Pennsylvania has new Gov. Tom Wolf’s first budget idea. There is enormous potential in Wolf’s budget, but that potential can turn positive or negative, and its turning will be dependent on many entities that are outside of the governor’s — or even the Legislature’s — control. And that worries us greatly.

 Wolf floated the idea of a 5-percent extraction tax on natural-gas drilling in Pennsylvania. We knew it was coming. We have supported the idea of a reasonable extraction tax, in line with other gas-producing states, since the Rendell administration. We spoke little of it in the past four years, because with Gov. Tom Corbett in office, we figured the idea was a nonstarter. We still support the idea as a means of addressing Pennsylvania’s constitutional protection of its natural resources for the benefit of all residents. Yes, there are fees and royalties paid to the landowners and to the communities where the drilling occurs, but the resource — like water — is one that should benefit all Pennsylvanians.

 The plan to raise the personal income tax and the state sales tax is, likewise, something we’ve heard before. And we’ve supported the ideas within a very narrow definition. That definition fell within the bounds of House Bill 76, the Property Tax Elimination Act, which has been discussed for some years but, like so much legislation in the state, can’t gain purchase in the Legislature.

 Wolf also talked about property taxes in his March 3 budget address. Specifically, he claimed that the taxes noted above, extraction, income and sales, could be combined to allow property taxes to decrease by $1,000 for an average family.

 This is where the grave danger comes into play. We have supported the Property Tax Elimination Act because of the word “elimination.” This was not legislation discussing an average decrease. This was not a matter of allowing all the mechanisms for collecting the tax to remain in place. The proposal was about elimination — except for a couple very specific circumstances, such as construction, and for finite time frames. 

Wolf’s number no doubt has some reasoning behind it, but it has no real-world testing. His plans will require school districts and other municipalities to play along, to reduce tax rates on homeowners to meet the governor’s expectations. When was the last time a school district in Pennsylvania lowered property taxes? David Baldinger of the Pennsylvania Taxpayers Cyber Coalition, dismissed Wolf’s proposal outright in a recent op-ed.

 Baldinger correctly concludes that Gov. Wolf’s numbers simply don’t add up: “The governor estimates that his increased taxes will generate $3.2 billion for property tax relief. Total residential school property tax is about $10 billion and his estimate simply doesn’t amount to a 50-percent reduction. And even if it did, without capping or eliminating the property tax, it will continue its relentless increase until all of the “relief” is wiped out — his replacement taxes cannot keep pace with the property tax increases.”

 Without a specific mandate eliminating these taxes, we do not expect it to happen on a large scale. What we fear is that smaller governments will keep all of their taxing mechanisms in place. They will collect the new revenue streams from the state and bank on existing streams to provide rainy-day protection should the political winds change again. At best, perhaps they wouldn’t routinely raise property taxes year after year.

 That scenario would be a disaster. And it’s the one we predict. Let’s get back to H.B. 76, and then we can talk.

Last edited by Common Sense (3/10/2015 6:07 am)


 “We hold these truths to be self-evident,”  former vice president Biden said during a campaign event in Texas on Monday. "All men and women created by — you know, you know, the thing.”

 
 

3/10/2015 6:31 am  #2


Re: Property tax ‘reduction’ and ‘elimination’

What the Governor proposes is smoke and mirrors to hide a long term tax increase on most Pennsylvanians.

One of the more onerous changes that he is proposing to the sales tax is the elimination of the exemption for funeral related expenses, such as caskets, vaults, and mortuary services.

With the AVERAGE Funeral now costing $10,000.00 that would generate $666.66 per death.

Many families can barely afford Funerals now--witness the number of times that you see "memorial contributions to XXXX Funeral home to offset cost of services".

This from a Democrat, whose party normally seems very concerned with helping the poor.


Life is an Orthros.
 

3/10/2015 9:29 am  #3


Re: Property tax ‘reduction’ and ‘elimination’

Eliminating property taxes is the only relief (letter)
http://www.ydr.com/letters/ci_27675943/eliminating-property-taxes-is-only-relief-letter

Here we go again, this time, Gov.Wolf talking about property tax relief. Our state government just doesn’t get it. We don’t want “relief,” we want property tax “eliminated.” Anyone that understands politics knows full and well that a reduction in property taxes coupled with increased sales tax and personal income tax will result in being worse off some years in the future. As time goes by the property tax will gradually rise again and then we will be worse off because we will then still be paying higher property taxes coupled with increased sales tax and personal income tax. — Frank Bowings, New Freedom

Last edited by Common Sense (3/10/2015 9:31 am)


 “We hold these truths to be self-evident,”  former vice president Biden said during a campaign event in Texas on Monday. "All men and women created by — you know, you know, the thing.”

 
     Thread Starter
 

3/10/2015 9:55 am  #4


Re: Property tax ‘reduction’ and ‘elimination’

In general, I'm a Wolf supporter. However, I disagree with just reducing property taxes. They need to be eliminated. It's an antiquated system and reducing won't cut it for the reasons already stated.

 

3/10/2015 10:04 am  #5


Re: Property tax ‘reduction’ and ‘elimination’

Although I believe many will agree that there are some major problems with property tax inequalities, I also believe that there is not a real universal consensus as to how to fix the problem. 

Property taxes seem to fall most heavily on both seniors as well as districts that do not have much of a tax base. 

BTW, SB76 is not the panacea that some think it to be as it too has flaws. 

Wish I had a magic bullet to suggest, but I do not. 



 


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

3/10/2015 10:11 am  #6


Re: Property tax ‘reduction’ and ‘elimination’

I did a deep dive into this at the old Exchange, but it derserves a second look here.

ThePennsylvania Budget and Policy Center put out a thorough report late last year which I think provides a sensible path forward on property tax reform. It's called Reform, Not Repeal and it provides a considerable number of data laden facts about how we use property taxes to fund schools and how the commonwealth stacks up against other states. I recommnend everyone who cares about this issue reads it.

Some highlights in their overview

Property taxes in Pennsylvania are generally affordable. 

Eliminating school property taxes would harm Pennsylvania’s public schools, and would be a radical step unjustified by the facts

Lawmakers should ensure that property taxes are applied more uniformly, and provide targeted tax relief for seniors and working families with higherthan-average property taxes. 

Property taxes are the most reliable and stable source of funding for these services, preventing cuts to schools, police, fire, and jails during economic downturns

Despite critics’ claims, property taxes are not high in Pennsylvania. In fact, in some areas property taxes, including school property taxes, are low. In one Pennsylvania county, the average homeowner’s property tax is just $850 per year. In 45 of Pennsylvania’s 67 counties, total average property taxes – including school, county and municipal taxes – are less than $2,000 per year. That equals $167 or less per month.

In one of every four school districts, 129 in all, school property taxes on homes can be considered low, or less than 1.5% of all taxable personal income in the district.

Efforts to eliminate Pennsylvania’s property taxes and raise other taxes, such as Senate Bill 76 would do, take a sweeping approach to a limited problem. That legislation would cost public schools $2.6 billion in lost funding within five years, according to the Independent Fiscal Office

Although overall property taxes are not high in Pennsylvania, some people have trouble affording them, particularly senior citizens. Pennsylvania’s property tax rebate program has eliminated property taxes for more than 35,000 households, and reduced taxes for 250,000 more households, but the amount of relief offered is small and hasn’t kept pace with inflation

Pennsylvania has also increased its reliance on property taxes to fund schools over time, and asks more of local taxpayers in this regard than all but a handful of states. Increasing the share of state funding, and distributing more state funds to those communities where local taxes are comparatively high, would go a long way in addressing legitimate property tax concerns

Counties have done a poor job keeping up on property tax reassessments. Without regular reassessments similar properties can have very different property taxes, which makes the system unfair. Seventeen counties haven’t reassessed property in more than 35 years.  

Because a limited number of school districts have high property taxes, reforms should target those communities and the people having trouble paying them. A “one size fits all” approach is costly and creates more problems than it solves.


I think you're going to see a lot of different United States of America over the next three, four, or eight years. - President Donald J. Trump
 

3/10/2015 10:40 am  #7


Re: Property tax ‘reduction’ and ‘elimination’

I will take the time to read and digest the article you posted this afternoon when I can give it my undivided attention.
What I will say so far, is that the statement that in PA property taxes are not high seems subjective to me. In relationship to what? I'm feeling like they are ignoring the fact that PA has extremely unbalanced populations. Most all of the counties in PA are not heavily populated. A few are extremely populated. And then you have to take into account the incomes of those individual populations.

In my experience, highly populated areas have higher property taxes because the median income of the people there is lower, which means they can't afford to buy a house, which means the burden falls disproportionately on fewer people. If the population were spread out much more evenly in PA, counties with lower taxes would become higher in property taxes. For example, a county with 60,000 people who have a higher than average median income will have much more "affordable" taxes than a county with a population of 460,000 with a lower than average median income, just by the sheer fact that the taxes need to stretch farther with a smaller homeowner tax base.

Last edited by BYOB (3/10/2015 11:17 am)

 

3/10/2015 11:54 am  #8


Re: Property tax ‘reduction’ and ‘elimination’

BYOB wrote:

I will take the time to read and digest the article you posted this afternoon when I can give it my undivided attention.
What I will say so far, is that the statement that in PA property taxes are not high seems subjective to me. In relationship to what? I'm feeling like they are ignoring the fact that PA has extremely unbalanced populations. Most all of the counties in PA are not heavily populated. A few are extremely populated. And then you have to take into account the incomes of those individual populations.

In my experience, highly populated areas have higher property taxes because the median income of the people there is lower, which means they can't afford to buy a house, which means the burden falls disproportionately on fewer people. If the population were spread out much more evenly in PA, counties with lower taxes would become higher in property taxes. For example, a county with 60,000 people who have a higher than average median income will have much more "affordable" taxes than a county with a population of 460,000 with a lower than average median income, just by the sheer fact that the taxes need to stretch farther with a smaller homeowner tax base.

A lot of what you are describing is because in many urban areas (York is a prime example) the suburban flight has stripped the urban area of its tax base. There was a time that all businesses, shopping, and people in general lived in the city. Some cities still retain businesses and high end properties, but that is not the norm. Just look at all the industry (that provided a good tax base) that no longer is located in the city but is scattered through the county and has helped the tax bases there. 

I believe that overall in the State that what Lager has said about taxes would be true. That, however, does not mean that the urban areas (as well as people on a fixed income everywhere) do not feel a great deal of pain from how the current system works. 



 


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

3/10/2015 12:13 pm  #9


Re: Property tax ‘reduction’ and ‘elimination’

I totally agree, tennyson. It's a 'perfect storm' of circumstances. Jobs go away, people's income goes down, a lot are forced into cities where there is more renting options because they can't afford to buy, which equals more people and less of a tax base. If the average cost to buy a house in the city is, let's just pick a number - $30,000, for property tax purposes, you would need 4 times the property owners to get a similar tax base to an area that the average house is $120,000. And that doesn't take into account the fact that there are generally more renters in higher populated areas, which, with an investment property, it usually houses more than one family. So you buy a property at $30,000, then you break it up into multi-units, and it just keeps adding to the population, but not the tax base. Those are really good reasons alone to do something about property taxes.

Last edited by BYOB (3/10/2015 12:33 pm)

 

3/10/2015 12:32 pm  #10


Re: Property tax ‘reduction’ and ‘elimination’

Damn, I can't get the article to open on this computer! I'll have to wait until I get home later to read it.

I do want to say that the biggest problem I have with property taxes by far is the school tax portion.

 

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