Josh First's Blog

Your home’s property taxes: “They are called special interests for a reason”

Guest commentary from grass roots activist Ron Boltz, and first published at www.papra.org:

They’re called “special interests” for a reason. Of course I’m referring to the scores of lobby groups in Harrisburg who often fight against good ideas or good legislation, or push for bad ideas and legislation, depending upon how it affects them personally or the relatively small group which they represent. The degree to which a proposal helps or hurts others or our State is often irrelevant to special interests. Following the money is almost always the path to an explanation that might otherwise not make much logical sense, and then the true motivations become clear. It’s the same as it ever was.

While this is nothing new, it’s nonetheless very frustrating when these lobby groups unashamedly flip their talking points when it benefits them to do so, completely contradicting statements they’ve made previously. Such is the case with the PA Chamber of Commerce and the Tax Foundation’s recent proposal to overhaul Pennsylvania’s tax structure.

When lobby groups oppose ideas that are popular with the public, they often conjure up phony “reasons” to justify their opposition rather than openly stating their real objections. We’ve seen this time and time again with The Chamber and their refusal to even consider school property tax elimination. Americans for Prosperity and The Commonwealth Foundation also joined them with disappointingly weak excuses of their own.

For example, The Chamber says things like “we can’t tax diapers!” and “we have to fix the cost drivers first”. AFP had their all-encompassing “we don’t support tax shifts”, and Matt Brouillette loved his dumbed down “left pocket-right pocket” analogy in an attempt to use bumper sticker politics to demonize elimination. For those who haven’t heard it, let me explain so you can understand what we’ve been dealing with.

Matt would say something similar to “it doesn’t matter if you take money out of your left pocket or your right pocket, you’re still paying and it’s still money coming out of the economy”. This was his attempt at bashing SB 76, which is being proposed as a revenue-neutral school property tax elimination plan that would shift the burden to the income tax and the sales tax. He was trying to imply that we would be no better off under such a plan, and everybody would be paying the same regardless. This type of talking point may resonate with some, but it’s easy to blow holes in his analogy.

His own example basically says that he doesn’t believe tax policy matters. According to Matt, if it’s the same amount of money collectively, then it’s irrelevant how the money is taken from us. Of course we do know that tax policy matters, especially when we’re talking about how many “pockets” we’re taking the money from. SB 76 expands the tax base, which is extremely important. It also matters how much money we’re taking out of each pocket.

If we take $1 out of the pocket of someone who has $10, we’ve taken 10% of his or her earnings. If we take the same $1 out of someone who has $100, we’ve only taken 1% of that person’s earnings. This is the nature of the property tax. It applies different rates to everybody, is not based on our income, and it’s also very regressive.

During my travels, I met a single mother in Monroe County who is forced to “contribute” 14% of her income toward her school property taxes. Last week I spoke to a woman in Lancaster County who, since the reassessment that took place there, is now paying a full 25% of her and her husband’s income in property taxes.

This scenario plays out everywhere across the state. The only way to solve this is to completely eliminate the school property tax and replace it with a broader-based method that applies the exact same tax rates to everybody, regardless of where you live. The property tax system cannot be fixed, and it can never be “fair”. Our opposition knows this to be true, but they avoid talking about these things in their defense of the status quo.

Putting all of this aside, if Mr. Brouillette truly believes it doesn’t matter which pocket the money comes from, then why is he fighting against it? If he really believes nobody would be better off, then he also has to be believe that we would also not be any worse off. Of course, my opinion is that Mr. Brouillette doesn’t believe his own talking point. He knows tax policy matters. For the record, I like Matt, and I find some of the data C.F. puts out to be very helpful. But they are wrong on this issue. Matt is no longer with C.F., but others in the organization also oppose school tax elimination.

We’ve always known that The Chamber really doesn’t care about taxing diapers, and we know their supposed opposition to expanding the sales tax base because “it hurts the lower income folks” is just playing politics. Their true opposition to property tax elimination would not earn them many accolades if publicly stated, so they join the PSEA and the PSBA in using emotional scare tactics. But now their new plan points out their own contradictions and makes it very clear that they are willing to make exactly the same opposing arguments if it means benefiting themselves.

As I give a few examples, I want to make it clear that the purpose is to highlight their contradictions and show that they really don’t mean what they say in regards to why they oppose school property tax elimination. I will not opine as to whether or not any of their proposals would be good or bad for Pennsylvania’s economy, and I’m not trying to invoke a class warfare argument. In order to have a productive debate, it’s necessary to talk about how different people will be affected, and it’s also necessary to talk about the relative fairness of our tax systems. That isn’t class warfare. It’s simply honest discussion, which is something in which our opposition has thus far refused to engage.

Included within the Chamber’s proposal is an array of options that include rate changes, tax eliminations, and the levy of new taxes. In other words…a myriad of tax shifts. There is no mention of any type of “cost controls” among their tax shifts plans, so I suppose that critique only applies to things they oppose, and not their own ideas. For the record, SB 76 does include spending controls, and I have long held that we will never get cost controls until we get spending controls. The reason we don’t have real pension reform or prevailing wage law elimination is because the state legislature, who mandates these things, gets to punt the responsibility for paying for them down to the school boards and the homeowners.

There is no accountability in the current system, and therefore no incentive to change it. How these lobby groups, who have been around politics for as long as they have been, cannot recognize this reality is beyond me. Perhaps spending so much time inside the Capitol courting politicians has clouded their vision. Perhaps they don’t know how politics really work after all this time, or maybe they really don’t want to see these problems resolved. I’ll let you ponder that on your own, but their “cost control” philosophy is akin to continuing to hand money to the irresponsible while asking them very nicely to curtail their bad habits, with no consequences when they refuse.

Our philosophy, on the other hand, is to stop asking a group of people who have shown no willingness to control themselves, to please control themselves, and instead just cut off the money in order to force the issue. The property tax makes all of this overspending possible and is how they escape accountability. Eliminate the scapegoat, restore accountability, and watch as these things magically begin to be addressed in a meaningful way. Until then, be prepared to continue to watch the pension problem get far worse, property taxes continue to skyrocket, and the finger-pointing to resume with nothing being done.

Getting back to the Chamber’s proposal – They call for a lowering of the Corporate Net Income Tax from 9.99% to 5.99% or 6.99% (depending on the option), and the elimination of the Gross Receipts Tax on businesses. To pay for this, the plan calls for an expansion of the sales tax base, a new local income tax, and the first ever tax on retirement income. It says that the new retirement tax revenue could be used to “buy down” the PIT (Personal Income Tax) rate to 2.5%, but says that it would be “better used as a pay-for to reduce less competitive tax rates elsewhere.”

In other words, the Chamber wants retired seniors to pay a new tax in order to lower business taxes. But don’t fret, seniors…they’re generous enough to entertain the possibility of using some of the new retirement tax to expand rent and property tax rebate programs for some seniors. But seniors won’t be the only losers in the Chamber’s tax shift. They also propose a local income tax on working families as a way to eliminate the Gross Receipts Tax.

Would these organizations please tell me again their views on redistribution of wealth, tax shifts, and the creation of new “winners and losers”? Pardon me for noticing some contradictions to what they claimed were their opposition to school tax elimination. Let’s examine a few of their talking points, and how they are seemingly no longer a concern when it comes to their own proposal(s).

The creation of winners and losers

They claim school tax elimination would just create new winners and losers. Our response is that the property tax system is responsible for creating winners and losers in the first place, for far too many reasons to list here. Everyone knows this to be true. Our proposal actually fixes this scenario by expanding the tax base from mostly just homeowners to everyone in the state who has an income, and to everyone who buys things (including tourists). In other words, everyone contributes. It also treats every taxpayer exactly the same by applying the same rate to their income, and the same sales tax rate to the same items and services. No more winners and losers paying different rates with enormous disparity an inequities.

While they love to use this talking point to criticize our school tax elimination proposal, they conveniently ignore the winners (businesses) and losers (senior citizens and working families) in their plan. Of course they will tell us that when businesses win, we all win, but I could say the same. When homeowners “win” with more disposable income, then businesses and the economy will also win. Businesses also win by making the entire state a KOZ (Keystone Opportunity zone) rather than the state picking the winners and losers. The Independent Fiscal Office report agrees.

The Stability of the tax

The Chamber, and virtually all of the public school lobby organizations, love to say that property tax revenue is “stable”, while other revenue from other sources is not. Therefore, they say, we cannot eliminate it. We always ask “stable for who?” For the tax collector? I suppose when you can constantly raise the rate, and with the threat of losing one’s home, the tax collector could view the property tax as stable. But what about the taxpayer? Is it stable for them? Absolutely not.

While the Chamber praises the property tax and touts it’s supposed stability, it has contradictory views of other taxes. In one section of their plan, they write about how governments tend to favor the Gross Receipts Tax because it produces large and stable amounts of revenue. It then goes on to say:

“…this revenue stability, however, does not outweigh the tax’s economic harm”.

Why then, does the Chamber love the property for providing the government with large and stable amounts of revenue, but then overlook the harm it does to the homeowner and the economy? Why does the same critique not apply to the property tax?

From the viewpoint of the taxpayer, the sales tax and the income tax are far more stable. Consider that the income tax in Pennsylvania has only been raised one time in the past 26 years. There was a 0.17 percentage point increase in 2004. The change previous to that was actually a lowering of the rate. That sounds pretty stable to this writer.

Even more stable is the sales tax, which has been 6% since 1968, but yet each of these taxes have continued to generate more revenue through natural growth, and they do so without the need for constant rate increases. I think we can all agree that Harrisburg has had no trouble spending more of our tax dollars in nearly every annual budget, and they do so mainly using these two funding sources. The Chamber’s report even touts the stability of the sales tax with this statement :

“Between 1999 and 2017, inflation-adjusted collections only diverged from the overall period’s average by more than 3 percent three times: once, when collections dropped in 2010, and again in 2016 and 2017, when collections comfortably exceeded the average”

While state revenues may decline temporarily during economic downturns, these periods are relatively short-lived, and the time spent in the black far outweighs the time spent in the red. In an Independent Fiscal Office report to Rep. Pashinski on August 16th of this year, there is a chart comparing the income tax growth rate to the property tax growth rate. This is a chart showing growth rate increases and decreases, so when the line goes down on the chart, it doesn’t represent a revenue loss until it goes below zero. Until then it’s still growth, and history shows the overwhelming majority of time is spent above zero. Legislators either don’t understand this, or they purposely try to spin this chart by saying it shows that the income tax is “too volatile” to be used to fund public education, but the opposite is true.

The IFO chart clearly shows that from 2004 to 20018, the property tax grew at a rate of 3.5%, while the income tax revenue (not the tax rate) grew at a rate of 3.4%, virtually the same. Again, this is with no rate increases on the income tax, but literally thousands of property tax millage rate increases during those years across our 500 school districts.

If the State can run their budget using the income and sales taxes as it’s main sources, and manage to grow spending year after year, then why can’t we fund public education this way? If taxpayers and homeowners are expected to manage their money during economic downturns, while they have fixed costs like property taxes and other bills to contend with, why don’t school superintendents and business managers, who are paid six-figure salaries, have the ability to do the same? If they cannot manage money the same way homeowners do, perhaps we should reconsider leaving them in charge of multi-million dollar budgets.

Taxes should be based on Income

One of the biggest problems with the property tax is that it is not based in any way on one’s income. Inaccurate assessments and unequal distribution of state money to our schools, combined with our homes not being a reflection of our wealth, leads to the enormous disparities in what each individual taxpayer must contribute toward the burden of funding public education. We have long condemned the property tax’s gross unfairness, inequities, and regressivity. Our State Constitution reads “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.” The property tax falls far short of meeting this mandate.

While the Chamber doesn’t care that the property tax isn’t based on income, their report laments the fact that the Occupational Assessment tax is inequitable and not based on actual income by saying the following:

“All of which is to say that the best measure of income is income, not a tax assessor’s best guess of what that income would be assuming that a given taxpayer hewed to the median for his or her profession.”

If that’s how they feel about the Occupational Assessment tax, then how can they praise the property tax, which is not only not based on income, but it’s not even based on an assessor’s best guest of our income. Rather, it’s based on an assessor’s best guess of the value of our home, and I don’t think I even need to opine about the inaccuracy of assessments, which their own report also acknowledges.

The Pyramid effect of taxation

The Chamber wants businesses to be free of sales taxes on business-to-business transactions, and they want to eliminate the Gross Receipts Tax because this results in multiple levels of taxation that will, in turn, increase the price of the product on the end consumer. This is a valid argument. The report gives an example showing the steps a bottle of beer goes through in order to reach a consumer at a restaurant. It shows the farm, the brewery, the distributor, the restaurant, and finally the customer. Using their own example, it’s obvious that the property tax also results in multiple levels of taxation, but this is not mentioned as a concern.

Not only does the farm, the brewery, the distributor, and the restaurant pay property taxes, but so do the manufacturers and the companies who make the parts to build the farm machinery and tractor trailers, not to mention the companies who build restaurant equipment. This too is passed on to the end consumer.

The Chamber claims that property taxes have a minimal effect on economic decision making

The report reads:

“Property taxes tend to be justified on both economic and practical grounds: economically, as a generally efficient form of taxation which raises revenue with a minimal effect on economic decision-making…”

Property taxes result in sheriff sales, foreclosures, and forced relocation when the burden can no longer bet met by the occupant. Proof of this abounds in page after page of newspaper tax sale listings. It is often said that 10,000 or more homes are sold at sheriff sales annually in Pennsylvania, a statistic that’s rarely challenged.

Escalating property taxes most certainly affect spending habits for both homeowners and businesses alike. As the PA Liberty Alliance goes door to door across the State, we’ve heard hundreds of stories of forced relocation, and how rising property taxes are doing serious damage to the finances of many families. I assure you that stories of senior citizens being forced to choose between medication and paying their property taxes are real. I’ve met these folks.

We also talk to small business owners who are struggling to compete, and who cannot expand due to the inability to pass on their skyrocketing property taxes to their customers the way a large business can. The Chamber claims to represent small businesses, but in our discussions we often hear these owners refer to the organization as “The Chamber of Big Business”. This seems to be a growing consensus in the small business community. A look at where the majority of The Chamber’s funding comes from might give clues as to why they so strongly oppose property tax elimination, and why many small business owners feel left behind.

The Chamber calls the property tax “efficient” and “practical”

In the previous section, I only included part of the quote. Here is the rest of the statement:

“Property taxes tend to be justified on both economic and practical grounds: economically, as a generally efficient form of taxation which raises revenue with a minimal effect on economic decision-making and consistent with widely accepted principles of taxation, and practically, as a well-established source of funding that is both familiar and not easily replaced.”

There is so much wrong with just this one sentence that it makes me wonder if we’re both talking about the same property tax. How anyone could call the property tax “efficient” is beyond comprehension for this writer.

Having to establish assessed values for every property in the entire state alone should make it obvious that this is the most INEFFICIENT tax we have. We need to hire appraisers, county assessors, and tax collectors to administer the tax. School districts must chase down delinquent taxes, and then go through the process of seizing the property when the homeowner doesn’t pay. Then we need to burden the county sheriff’s office with the duty of evicting the occupants, and then of course we need to go through the tax sale process.

Countywide reassessments cost taxpayers multiple millions of dollars each time, and always result in years of appeals that must be heard and dealt with. Maintaining the property tax system costs taxpayers enormous amounts of money. On the other hand, the sales tax is usually collected at the point of sale, and most people have their income taxes automatically deducted from their paychecks. I’m not suggesting there is no expense for businesses and taxpayers to comply with income and sales taxes policies, but modern technology has made it much easier and more efficient.

I don’t know what the Chamber considers to be “accepted principles of taxation”, and the report doesn’t elaborate, but it’s hard to imagine any standard in which complete inequity, inefficiency, unfairness, regressivity, and skyrocketing rates would be considered good principles. How can any tax that isn’t based on income, which the Chamber itself says is the best measure of taxation, be considered a tax with good principles?

The line about the property tax being “well established” and “familiar” sounds very reminiscent of the old “this is the way we’ve always done it, so it must be right” type of thinking. Are things that are “well established” and “familiar” always good? Of course not, but what the Chamber means by this is that businesses have adopted to the property tax and can pass on the cost, unlike a homeowner who cannot. Businesses have also mastered the appeals process and can have their assessments lowered if they become less profitable. Homeowners, on the other hand, cannot have their assessments lowered when their income goes down. They either have to pay up, sell their house, or don’t pay and the government takes their home, and usually most or all of their equity as well. This is devastating, unjust, and unthinkable in America where we are supposed to value property rights.

The Chamber’s Love/Hate relationship with the Income Tax

While The Chamber wants to shift the Gross Receipts tax to working families by instituting a new local income tax in its stead, the report also speaks of how the income tax “discourages investment and labor”. They claim that local income taxes encourage out-migration, particularly if it is not necessary to move far. They cite this as a reason that property taxes are better, suggesting the property tax doesn’t force anyone to move, or that it doesn’t play a role when deciding where to purchase a home or establish a business. I know plenty of people who moved due to large property taxes, but I don’t know a single person who told me they moved because of a local income tax. I also know some entrepreneurs who would have preferred to establish themselves in certain locations but the property taxes were prohibitive.

The report then says “…local income taxes are sustainable at modest rates, but create competitive disadvantages at higher rates, particularly those seen in Philadelphia and Pittsburgh” The local income tax in the overwhelming majority of the state is 1%, while the report says Philadelphia’s rate is 3.9%. So we can conclude that the Chamber considers a 3.9% local income tax to be a problem, but the 1% tax is sustainable. Let’s compare this to the property tax, which the Chamber props up and doesn’t believe to be a problem.

Most people pay far more than 1% of their income toward their school property tax, and as mentioned earlier, I’ve met one woman who pays 14% and another who pays 25%. Unless you have a money tree in your back yard, the property tax is still paid with our income, but it’s not actually based on our income. So if the Chamber sees a 3.9% local income tax as being a problem (as do I), then how can they possibly not see the property tax as being a much bigger problem? Does it no longer matter if we’re talking about homeowners rather than businesses?

Senate Bill 76 proposes a 1.88% income tax and an expanded sales tax, which the Chamber also calls for, in order to eliminate the school property tax. This would result in an overall tax cut for the majority of homeowners, backed up by multiple Independent Fiscal Office reports.

The question remains as to why the Chamber considers it good policy to institute a local income tax to pay for the elimination of business taxes, but it’s not O.K. to use an income tax to eliminate the school property tax? At the same time, how do they call a 3.9% local income tax a problem, but not a local property tax that levies a different rate on everyone, as high as 25% or more on some? These are rhetorical questions, as I believe the answer is apparent. They are a special interest group, and the well-being of the homeowner is not of their concern.

The Chamber opposes SUT expansion for property tax elimination, but call for it in their plan

After the property tax elimination effort got some traction in 2015, the opposition groups suddenly began to take the issue more seriously. The grassroots groups they previously laughed off were now making their voices heard. Since it’s very difficult to defend a tax that’s as despised by so many people as the property tax, they needed to come up with some new talking points.

This is when the refrain became “we can’t tax diapers!” Being led by The Chamber, lobby groups and politicians alike were singing off the same sheet of music. This was the new talking point that was designed to invoke emotion, while bypassing logic. Of course, we see this all the time in politics, and in this case, The Chamber now appointed itself as the champion of single mothers and their children. Imagine how heartless the property tax elimination crowd must be to propose a diaper tax!

Thankfully, the public didn’t buy it. At a town hall in Monroe County, a single mother who was struggling with her property taxes easily recognized that she would be far better off paying a relatively small sales tax on diapers than she would be paying property taxes, especially considering the property tax burden would be there for the rest of her life, or at least as long as she “owned” a home. We constantly hear about the supposed “regressivity” of the sales tax, but by definition the flat rate sales tax is not regressive. The property tax, on the other hand, actually is regressive when viewed as a percentage of income. In this case, the single mother didn’t even earn enough money to be a financial “loser” under the SB 76 proposal. She could have spent every dime she earned on the newly taxed items and still wouldn’t even come close to paying the same in sales taxes that she currently pays in property tax, even factoring in the PIT portion.

After all of their opposition to expanding the sales tax, I find it quite the contradiction to now propose exactly that. I can only assume that The Chamber doesn’t believe it’s own rhetoric as long as business taxes are reduced and eliminated rather than the school property tax. While they don’t suggest a sales tax on diapers, they do propose options that include taxing gasoline and motor fuels, even while acknowledging that we already pay the highest fuel taxes in the country. Imagine the impact of that tax alone on working families and commuters.

But they don’t stop there. Among many other items, they list clothing, shoes, prescription and nonprescription drugs, college and vocational school tuition, health and social assistance, veterinary services and food. SB 76 still exempts clothing under $50 per item, prescription drugs, heating oil, all food items that a W.I.C. check could purchase, medical procedures and other things. Missing from the Chamber’s list are services that only wealthy people would use, like airplane services. It seems to me that the Chamber’s proposal would be more harmful to the middle and lower class than would be the expansion under SB 76. But hey, at least they don’t tax diapers…

The Chamber claims school tax elimination would harm young, low income families and renters

The President of the PA Chamber has repeatedly said that SB 76 would be bad for his young son and his family, who he says shouldn’t be paying a higher income tax to eliminate school taxes for seniors. I’ve often wondered, but never asked, if his son owns a home, or ever plans to. While these same critics talk about the new “winners and losers” after SB 76 is passed, they never acknowledge that the current system is where the “winners and losers” are created, nor do they recognize the fact that their own defense of the status quo is nothing more than them trying to pick the winners and losers themselves.

The reality is, this legislation would help new families, the lower income, and the middle class homeowners. Most of these folks are paying far more than 1.88% of their income toward their property taxes, and even the additional sales taxes will not make them financial “losers”. This is backed up by an Independent Fiscal Office report issued to Rep. Frank Ryan on November 6, 2017.

According to the IFO, the median school property tax paid on a Homestead (which does not include commercial, vacation, or rental properties) is $1,972. The average is higher at $2,291. The report says that the median PIT impact of SB 76 would be $1,008, and the sales tax impact on the median income range would be $200-$400.

The report goes on to say that even the PIT impact is over-stated, as it’s calculated on the median household income of $53,599, which includes retirement and social security income that would not be subject to the income tax under SB 76. This figure also excludes Pennsylvania’s PIT Forgiveness programs for the low income, which completely excludes from taxation income up to $51,000/year for a family with four children, $41,500 for three children, $32,000 for two children, and lower incentives for one and no children.

With this data, the math is easy. Under SB 76, the worst case scenario for a PA family earning the median (not average) household income would be a new income tax impact of $1,008 and a sales tax impact of $400 for a total of $1,408. Since the median school property tax on a home is $1,972, this means that in a worst case scenario, which won’t even happen due to the overstated situation mentioned above, the savings for a family earning the median income and paying the median school property tax would be $564. The real world savings would likely be significantly higher.

Despite their best efforts to convince us otherwise, the special interest opposition is wrong. The wealthy are the most likely to end up paying more under SB 76, not the middle and low income homeowners. They wealthy are, after all, the people who may have a high enough salary, and who may spend enough money on the newly taxed items to result in a higher tax burden. I know quite a few wealthy people who contribute much less than 1.88% if their income toward school taxes. I don’t believe any of my middle or low income friends who own homes can say the same. Most are above 3%, many far higher, and as mentioned earlier, I now know someone who pays a 25% effective rate.

Renters also pay property taxes indirectly through their rent payments, as landlords must pass this cost on to their tenants at some point. We have U.S. Census bureau data that shows rents increasing at nearly the same rates as property taxes. This is not a coincidence. During our interactions with legislators, we often hear landlords being demonized as greedy and heartless, and we’re told that landlords would never lower their rents if SB 76 were passed. I find this to be yet another attempt at politics of emotion, and not logic. SB 76 would at a minimum stabilize rent costs. Some landlords would lower their rents on their own, and others would be forced to as the market adjusts and more people purchase their first home. Does the Chamber no longer believe in free market principles?

If these legislators are truly concerned about the impact to renters, the best thing to do for those folks would be to make homeownership easier for them to achieve. This bill certainly does that by removing a large part of the property tax burden. Part of the regressivity of the property tax is that millage rates tend to be the highest in our 3rd Class cities, where incomes are often lowest. In fact, in a study done by Joel Sears, a fellow Pennsylvania Property Rights Association consultant, he shows that a $30,000 home in Upper Darby has a monthly property tax payment over TWICE that of a normal mortgage payment in this price range. No wonder so many people are trapped into a lifetime of renting and being denied the pride of owning a home of their own, and becoming a lasting part of their community.

The problem with all of their arguments are that they are only based on a snapshot in time. It’s likely that immediately following the passage of SB 76, a family who rents may not benefit. It’s also true that seniors will likely benefit the most. But we don’t live in a snapshot in time. Young families and renters will buy homes of their own, go through the decades of their working lives, and hopefully make it to retirement in their senior years, meaning today’s renters will also benefit. The alternative is to do nothing and watch property taxes and rents continue to skyrocket, further damaging our economy and sending working families and businesses out of the state.

We always hear the talking point “if we want more of something, subsidize it, and if we want less of something, tax it”. Why then, does the Chamber support the current system that taxes homeownership every year, in an ever-increasing fashion, while we subsidize non-homeownership with rent rebate programs? The only logical answer is, once again, the Chamber doesn’t view homeownership as a benefit, or perhaps not even as a necessity, especially considering they seemingly have no issue with the government seizing homes as a result of this tax.

The Chamber’s plan for the property tax problem

While The Chamber praises the property tax, they do acknowledge it’s flaws in multiple pages of their report. They even cite a study by The Council on State Taxation which compares the uniformity and efficiency of property taxes in the 50 states. It gave Pennsylvania a grade of a D, and ranked us dead last.

So what is The Chamber’s solution? More frequent countywide reassessments. That’s their big “solution”. They also call for consolidated property tax bills, so we can pay one bill to the county, who can, in turn, distribute the money to the schools and local municipalities, rather than paying separate bills. There’s not even a new reduction scheme in their plan, which would only end up being a tax increase anyway so I’m really not complaining. Their answer is actually a tax increase, and as mentioned earlier, these reassessments are very expensive and time consuming.

Thanks to Joel Sears, we have data which shows that even countywide reassessments don’t fix all of the problems inherent in the property tax. He did a real life evaluation in Lancaster County which compared actual sales prices of homes that sold in the same timeframe as their recent reassessment, and compared them to the assessed values both before and after. He found that the same level of inequities exist even after these reassessments, and in some cases, they got even worse. That’s what taxpayers get for their multiple millions of dollars spent in an effort to make the current system more uniform.

Conclusion

Proof abounds that the property tax system is broken. It cannot be fixed. It cannot be made to be fair. Any reduction scheme will just be a tax increase as the property tax continues to skyrocket. Elimination is the only answer.

This absolutely can be achieved, and we can fund public education in a way that treats all taxpayers the same, eliminating the current winners and losers scheme. The Independent Fiscal Office confirms that homeowners would have more disposable income, home values would increase by an average of 10%, and the state would be more attractive to businesses. But apparently these benefits aren’t good enough for the Chamber, Americans for Prosperity, the PSEA (teachers’ union), or the PSBA (school board association).

These folks all view themselves as “winners” under the current system, and they don’t want to lose their stranglehold on the homeowner. They’re happy with us continuing to be the “losers”, and they spend millions lobbying in Harrisburg to keep it that way.

In addition to all of the contradictions listed in these pages, The Chamber also condemns the Corporate Net Income Tax because it doesn’t allow for cyclical profitability cycles, and they speak of how some businesses are hurt during periods of low profitability. At the same time, they praise the “stability” of the property tax for the tax collector, while ignoring that the tax always increases even if the home owners’ paycheck decreases, or goes away completely. Yet another double standard on their part.

Homeowners cannot pass their property taxes on to someone else, as businesses can. The buck stops with us. At the same time, our homes do not generate income, as commercial properties do. The current system is completely upside down and backwards, especially considering our homes have absolutely nothing to do with education. We haven’t always funded education this way, as the school property tax was only instituted in the mid 1960’s. Even our State Constitution lays the responsibility at the feet of the legislature, where it belongs, and not with homeowners.

No tax should ever have the power to leave one homeless, and our fundamental right to acquire and own property needs to be restored. If all of the other problems with the property tax aren’t reason enough to abolish it, these few reasons certainly are.

They’re called “special interests” for a reason.

Ron Boltz, President – PA Liberty Alliance

Consultant – Pennsylvania Property Rights Association