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Posts Tagged → rent

Property Tax Accountability

Yesterday a majority of Pennsylvania voters passed a referendum, the first step in amending the Pennsylvania constitution to allow for a much fairer property tax situation.

The current Pennsylvania property tax arrangement is backwards, dating either from the 9th Century or the 1720s, either way fundamentally unfair to home owners.

Perhaps in the 9th Century or the 1720s owning a home or property was a big deal and unusual, indicating great wealth. Taxing the source of that great wealth may have made sense a thousand years ago or three hundred years ago, but today’s America bears no similarity to those bygone worlds.

In fact, one of the great things about America is that our form of capitalism distributes the greatest amount of wealth to the greatest number of people, based on one’s willingness to work hard. This is the heart of American meritocracy, and home ownership in a meritocracy is widespread, not unique. Owning your own home is an American standard, a basic goal of all Americans.

And so punitively taxing the very emblem of meritocracy is an artifact of the feudal society America rejected in 1776.

But Pennsylvania home taxes are now so high that people are essentially renting their homes from the government.

No matter if you buy your home with cash, build it yourself on property that has been in your family, or buy it with a mortgage that you eventually pay off, you still must pay incredibly burdensome property taxes that bear no relationship to the actual costs your home might (or might not) impose on the surrounding community.

Property taxes are now a form of rent. And if you run out of money to pay the government rent, the government can come and steal your home from you and sell it cheap to someone else.

The unpleasant truth is, your home is now a cash cow for others.

Teacher’s unions and their pet career politicians are the primary beneficiaries of the current property tax arrangement, rooted as it is in the government threat to steal your home if you don’t pay their crazy rent. Current property taxes are conveniently off the books, coerced from unwilling serfs, and paid to unaccountable government employees who by all standards are primarily failing.

Most government-run schools are disasters, failing to deliver on the most basic educational results, and yet the tax-paying public is constantly told that we must pay ever yet more money “for the kids.” And here in PA, the teachers automatically must pay the unions, and the unions then dump our own tax money into buying yet more career politicians to work against our interests.

Something has to give.

This is more about making government tax collection accountable to the people who pay the taxes, than it is about total tax reduction. Right now there is zero accountability for property tax expenditures or increases. Greedy unions control almost the entire process.

Unaccountable government schools continue to underperform and yet demand more and more money. The government schools oppose all forms of competition because they are committed more to holding onto their own power than they are to the success of the children they are supposed to educate. The way property taxes support this shameful situation serves everyone involved except the children and the taxpayers.

Something has to change.

The Pennsylvania of the 21st Century cannot continue to live under an ancient feudal arrangement. It is not fair, it is not sustainable, it is not good government.

We all deserve better.

A Severance Tax, now?

Talk about an addiction to spending other people’s money.

Yesterday in southeast PA, far away from the communities where this issue is most important and the citizens might not be so welcoming, Governor Tom Wolf staked out his position on creating a new 5% “severance tax” on natural gas from the Marcellus shale feature.

Right now, natural gas is selling at historic low prices, especially here in Pennsylvania.  The financial incentive to drill more or spend more money to get more gas is very low, and drill rigs have been disappearing from across the region for a year.

The Saudis began dumping oil months ago, in an effort to punish competing oil producers Iran and Russia, with the secondary effect of dropping gasoline prices so low that the natural gas industry got hit from that side, too.

So now is not only a bad time for the gas industry, it is also a time of greatly diminished returns on investment and on royalties received.  Scalping 5% off the top of that is punishing to everyone, including gas consumers, who will see their rates increase proportionally.

Here’s the biggest problem with a severance tax: Pennsylvania already has a 3% impact fee on Marcellus gas, and a Corporate Net Income Tax of 9.99% (let’s call it ten percent, OK?).  Most of the other gas and oil producing states have no such additional taxes; their severance taxes are the one and only tax their oil and gas producers pay, not the multiple high taxes and fees drillers in PA pay.

Pennsylvania government is therefore already reaping much higher revenue from the gas industry than other gas producing states.  That means that the companies doing business here are already burdened much more than elsewhere.

So adding a severance tax now, at this economically bad time, without commensurately lowering other taxes, or the existing Impact Fee, makes no sense.  Unless the people promoting this have an infantile view of how America and business work.

And that right there is the problem.  Way too many advocates for tax-and-spend policies like an additional severance tax have a Marxist view of business; essentially, to them, business exists to pour money into liberal schemes.

And speaking of spending, who believes that spending more and more and more taxpayer dollars on public schools, public teachers unions, and public teachers’ pensions, actually equates with better education?

So many studies disprove that (see the Mercatus Center), but it is a liberal mantra that taxpayers must spend ever more of their money to support public unions that support political liberals.  And both parents of students and taxpayers alike now correctly see that system for what it is – simple, legalized political graft to fund one political party.

Public schools are mostly a disaster, yet teacher’s unions and their political buddies continue to pound on the table for more and more money.  Homeowners are essentially now renting their houses from the teacher’s unions, and proposed laws like Act 76 seek to fix that unfair situation by removing the vampire fangs from homeowners and letting the larger society pay for its expenditure.

Going door-to-door for political races year after year, property tax has been the number one issue I have encountered among elderly homeowners.  So many of them can no longer afford to pay the taxes on their houses, that they must sell them and move, despite a lifetime of investing in them.  This is patently un-American and unfair.

So Tom Wolf is moving in exactly the opposite direction we need on this subject, and instead of trying to fix the tax situation, he seeks to make it worse.  To be fair, Wolf campaigned on raising taxes.  He just needs to remember that he did not get elected by voters who want higher taxes, they wanted to fire former governor Tom Corbett.