Property tax elimination potpourri
Members of the General Assembly heard a wide variety of options (as well as the drawbacks) on how to get rid of school property taxes at an informal hearing this week. They can take heart that no one asked for the elimination of county or municipal property taxes, so they can focus just on the $12.4 billion issue. One senator said that the participants were not “supposed to be the Hallelujah chorus” in reaction to what transpired, according to a newspaper article.
Consider the following: businesses don’t want a shift to income or sales taxes that would burden them; renters want to see rents fall if that large portion of property taxes is eliminated; people are concerned about senior citizens on fixed incomes but could see taxing retirement income as part of a tax shift (a separate news article says that buy-in has not yet been achieved).
One participant even pointed to the stability of the property tax when compared to other taxes and said it might be better to stay with what is in place. Another participant said complete elimination would be too drastic and that the focus should be on homeowner relief. Another senator noted “everybody around this table has a bogeyman in the room why this can’t be done and it becomes a hysterical conversation.”
In a Brief last fall we cited a report by the Tax Foundation that found property taxes as a percentage of owner-occupied housing value was 1.48 percent in 2016—lower than New Jersey and Ohio but higher than West Virginia and Maryland. A property tax ranking for businesses placed Pennsylvania 33rd out of the 50 states. We have advocated for focusing on reducing the cost of local government—school districts in this case—so that millage rates can be lowered and real relief can be granted to property owners, both residential and non-residential.