What would SB 76 do?

What PAR and PCTA (and their online presence as Pennsylvania Taxpayers Cyber Coalition) fail to note is that SB 76 and its companion House Bill 76 come with their own huge price tag that would affect all Pennsylvanians: devastating cuts to our schools (which rely heavily on local property taxes) and thus our communities. Not to mention what it will do our grocery bills.

SB 76’s proposed sales tax increase – from 6% to 7% – would be expanded to cover food making Pennsylvania one of only three states to tax something that is vital to human existence. To try to justify this, PCTA/PTCC is promoting the myth that “food items exempt from the sales tax will be fresh meats, produce, and dairy, along with many packaged and canned foods that are in their natural form, without added sugar or other adulterants.”

Yes, SB 76 has sales tax exemptions for the limited food items that pregnant and nursing women can buy using their Women, Infants, and Children program (WIC) benefits. Only certain categories of food and certain brands, ingredients, and packaging sizes are WIC-eligible. Most packaged foods and specialty foods will be subject to sales tax under SB 76, as will organic food.

SB 76 would also add a sales tax to child care services, non-prescription medications, funeral expenses, non-tuition fees at some colleges, non-housing charges at many nursing care facilities, garbage collection, parking fees, taxis, and public transit.

The personal income tax would be raised by 41% – from 3.07% to 4.34%.

Pennsylvania already has the 6th most regressive tax system in the nation. Raising and expanding the sales tax and the hiking the personal income tax just shifts even more of the burden of funding government and public services onto those least able to bear it.

What would SB 76 do to education?

Pennsylvania is second worst state in the nation for its funding gap between rich and poor schools. The funding gap is over $14,000 per student between the richest and poorest PA district; the difference equates to more than $357,000 per year in a classroom of 25 students.

This is a problem nationwide. Because schools generally rely on property taxes for their funding, higher-valued houses and real estate generate more revenue and better-funded schools than districts with lower home values.

Because Pennsylvania is one of only three states in the nation that doesn’t use state funding to balance out gaps between rich and poor school districts, districts depend on a disproportionately high ratio of local to state funds, getting 80% of their local funding from property tax revenue. The outcomes are not surprising: state cuts to education funding are more likely to hurt low-income and minority students stuck in poor districts. These cuts have long-term effects on student achievement in high poverty districts.

Pennsylvania public schools desperately need a more equitable funding source than property taxes. But eliminating the property tax and making schools dependent on sales and income tax is not the answer:

The sales tax is a regressive tax; raising it hurts those who are low-income and middle class more.

An income tax still means that neighborhoods with wealthier residents will have wealthier schools and will not address the funding disparities that now exist between PA school districts.

Both income and sales tax revenue dip during recessions.

SB 76 would also leave it up to voters whether school districts can levy any other taxes to raise money to repair or improve school buildings, likely forcing them to make even further cuts. It would also cap education spending at a rate lower than what school districts need to keep up with rising costs.

Don’t we need property tax reform?

Yes, there are fixed-income and low-income homeowners in PA who are struggling to pay for housing and they need help. But the answer is not ending all property taxes statewide.

PA property taxes are lower than national and state averages

While there are segments of Pennsylvania with high property taxes, they are the exception. On average, Pennsylvania’s property tax rates are on par with Ohio and significantly less than neighboring states like New York and New Jersey.

This isn’t to say those who need tax relief shouldn’t get it. But there are better and more targeted ways to achieve that, like reinforcing existing assistance programs or creating new ones, and supporting reassessments and other reform measures.

For example, only some 70% of the seniors who are likely eligible actually apply for PA’s Property Tax Rent Rebate Program, which helps half a million of Pennsylvania’s elderly, according to the Pennsylvania Budget and Policy Center. This program could be better-funded (the base benefit hasn’t increased in 8 years) and the application simplified.

PA could adopt the “circuit breaker” programs some states use to reimburse low-income property owners if their property tax is a certain percentage of their household income.

Measures that don’t, by the way, eliminate all property taxes for corporations that own shopping malls, factories, skyscrapers, and other large commercial enterprises. Nearly one in four assessed properties in PA are commercial or industrial; much of that is corporate-owned.

Eliminating all property taxes in PA would be a gross overstep. It’s throwing the baby out with the bath water.

Almost literally – as it is our children who SB 76 will hurt most, by sinking their schools and taxing the food in their mouths.

It is NOT the panacea that many think it to be.