Don’t like having to pay property taxes? Nobody does
Over the past few years, Republicans in Harrisburg have been fixated on a plan to eliminate property taxes.
On the surface, it seems like a reasonable idea to ease the burden on homeowners who are saddled with taxes that can overwhelm a mortgage. The confusion and uncertainty over Washington County’s recent property reassessment further illustrates the archaic process in which we fund our local governments and schools.
No one likes the system that’s in place. But is there a different way? And is it better, worse or somewhere in between?
Regardless, state Republicans are once again trotting out a plan to replace property taxes with higher earned income and sales taxes, and there are more questions than answers for taxpayers and government officials.
Who will be the winners and losers? We still don’t know.
One argument offered in favor of replacing the local property tax is that renters don’t pay their fair share. That’s not true. Renters indirectly pay property taxes through their monthly payments to their landlords, who then pay those taxes.
Another concern is that property taxes are crushing senior citizens. That’s understandable, but there are plenty of property tax abatement programs for seniors who own homes. If school taxes are paid mostly through earned income, that would place more of the burden on lower- and middle-class families.
One plan, narrowly defeated in 2015 by the Republican-controlled Senate, called for raising the personal income tax from 3.07 percent to 4.95 percent and increasing the state sales tax from 6 percent to 7 percent. That bill could be reintroduced this session. Any school district that wants to spend more than its state allotment would have put the tax increase on the ballot for voters to decide.
But the state has tried this before. Act 1 of 2006, also known as the Taxpayer Relief Act, gave voters the chance to decide whether they wanted to trade a higher earned income tax for lower school property taxes. It was an epic flop. The tax trade off was so poor the referendum was approved in only a handful of districts across the entire state.
Why do we think this plan would be any better?
Who receives the tax revenue – wrestling local control from municipalities and school boards – also raises serious questions. Peters Township School Board has already expressed concerns, which certainly would be echoed by other school districts in the state.
“We are going to be at the beck and call of a state government (that) is going to choose how much money we get,” Peters board member Lisa Anderson said in January. “And if we want to do a special program and they’re not going to give us money, we can’t do the special program.”
If a school district wants to do those special programs or negotiate its teachers contract or build a brand new school, it will be beholden to the state. Good luck ever getting a tax increase approved by voters.
Sen. Guy Reschenthaler, R-Jefferson Hills, told a packed auditorium at Canon-McMillan High School he also has concerns.
“It’s going to shift control away from our local governments, our local school boards, and it’s going to put all the control to Harrisburg,” Reschenthaler said.
No one likes to pay property taxes and all options should be considered. But an increase to the earned income tax and sales tax could cause unintended consequences and create long-term problems we’re not prepared to solve.