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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

 

Friends in low places

Several years ago several ambitious construction projects were begun, where the building material would come from our own oak trees on our property. Oak may not be the best or easiest building wood, because when it dries it is heavy and as hard as iron, and thus tough on tools and shoulders alike, but it is what we have there.

So oaks were cut, skidded, piled, and then milled in situ over about a five year period. An injury and subsequent surgery prevented me from continuing this remote effort, which then moved forward in fits and starts over several years. When we finally got around to completing the actual projects, much of that beautiful oak had been sitting out for a long time, and in some cases too long. After using up much of that oak lumber, a large amount yet remained in piles, where it had air dried.

Last week was my final drive to get under roof thousands of board feet of two-inch-thick oak boards, heavy beams, and smaller posts, before they started to rot. It was a lot of work. The unusual heat and blazing sun made the work go slower. One thing that surprised me was the absence of mice living in these outdoor piles. Normally mice run and scurry as the wood is moved, having nested among the boards in perfect little hidey holes.

The last pile of drying lumber was finally put away, with just a few boards remaining at the very end, butted up against a huge boulder that makes up part of a stone wall around the yard. As I dismounted the tractor, stepped over to the board ends, and reached down to grab them, a sound caught my attention.

It was a sound that set off primitive alarm bells in my brain.

At first it sounded like a cricket, and then a grasshopper, and then a second later my mind concluded it was a timber rattlesnake. After stepping back, well, let’s say it was an inelegant, well, ugly (it’s a big fat man jumping, after all) leap, minus my usual little girl scream that seems to accompany most of my unplanned and close-up rattlesnake encounters, I looked down.

A long black snake with a yellow diamond pattern was stretched out next to the boulder, about six inches from where my boot heel had settled moments before. The long grass against the boulder had concealed the snake from my eyes, which, frankly, had not looked there, but had rather been focused on the heavy boards, and how I was going to pick them up and manhandle them to their destination across the yard.

The snake’s angular head and erect tail with rattles confirmed it as a timber rattlesnake.

While it was not a huge male rattler, the likes of which I have caught and moved to safety off of roads and trails a number of times since I was a kid, it was nonetheless big enough to permanently remove a chunk of leg muscle. So I admired it for a minute, and then went on to other work elsewhere. When I returned an hour later, it was gone, though I thought I could see it coiled up right under the boulder’s edge. Instead of reaching down with my hands, I used the pallet forks on the tractor to pull out those last boards.

Over the course of the next two days, my mind kept replaying the encounter. In July 2001, when we had owned the property for seven months, DCNR forester Jim Hyland and I had scoured our property, as well as the adjoining State Forest and part of the adjoining private land, looking for rattlesnakes. That day we found a corn snake, a garter snake, a ring neck snake, and two green snakes. No sign of rattlesnakes among the rock and old slate quarries up high. Not even a shed skin.

So for sixteen years we had enjoyed our property without being mindful of rattlers. Our children had been born and raised around the cabin, running freely around the property. Sure, I spent a lot of time in our woods, a certified Tree Farm, and I have always been on the lookout for rattlesnakes, as well as other snakes, but I had seen few snakes at all, and never a rattler.

Snakes are awesome, they are awesomely cool creatures. I bear them no animosity whatsoever. In high school and college a pet boa constrictor kept me company, until she had grown so large that she was regularly breaking out of her cage and hunting our house cats. When I last saw her, she filled up one side of the man’s living room, and he regularly fed her rabbits and squirrels he trapped in his yard. She weighed about 150 pounds then, and was ten years old. I hugged her, but she just laid there, limp and dozing. Snakes…what can you do? Love em the best ya can.

And so now I am confronted with the fact that a potentially dangerous animal shares our camp with us. All around us we have seen rattlesnakes over the years, mostly run over by cars down on the highway, and increasingly I see them all over central and Northcentral Pennsylvania while cruising timber and looking at land. At some point I did expect them to join us as tenants of one sort at the cabin. Under the front porch is where I thought they would first show up, because it’s good cover and the mice like it there. Struggling emotionally to adjust to this new arrangement has not been painful, but it has been harder than I thought it would be.

The absence of mice under the wood piles reminded me why I accept and even welcome the presence of timber rattlesnakes, intellectually if not emotionally. Mice are a major pest, and they are destructive little bastards. Hearing them chirp and run inside the walls of the cabin at night, right next to my bed, is a source of aggravation. When they eat porch and barn furniture for nesting material, it is infuriating. They pee everywhere, and it stinks. We regularly trap them around the buildings and poison them inside the barn. Help reducing their numbers is most welcome, and anyone or anything that helps achieve that goal is a friend of mine.

Timber rattlers are beautiful to look at, and they are normally pretty docile, requiring a lot of pestering and rough handling to elicit a strike. But like all wild animals they are unpredictable, and the risk they pose to little kids playing outside is significant. Fortunately, our kids have reached ages where they can think carefully for themselves, consciously avoiding areas where rattlers would naturally congregate. And we now infrequently host families with little kids as guests, as most of our friends have kids the same ages as our own children, able to take guidance, if they are with their parents at all.

So the risks versus the benefits works out in our favor. The benefits of rattlers sharing our property are high, because they eat the hell out of mice. Rattlesnakes are my new friends, in low places, where they are needed most.

Welcome, friends.

 

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.

 

Natural abundance right now

Natural abundance surrounds us now. Apples, chestnuts, corn, osage orange “brainfruit,” and much much more. We scramble every day to snag wild apples along road sides, pick up chestnuts up the street before the squirrels eat them, and toss a few funky looking “brains” from a Lancaster farm road into the truck bed.

All with the intention of planting them on rural properties we manage.

By introducing new seeds to a given piece of land, we increase the species diversity and DNA stock on that piece of land.  Like Johnny Appleseed of old, we kick open holes in the dirt and pat a seed or apple core into place.

True, turkeys, bears, deer, chipmunks, and squirrels will eat much of what we plant. But if we do enough, some will survive.

And from there they will grow into trees and shrubs, feeding wildlife and people in the future, thereby perpetuating nature’s abundance.

US Supreme Court decides straight forward case with weird outcomes

Fernandez v. California was decided yesterday by the US Supreme Court.  Everything about it is just…weird.

In a holding that is enraging advocates of private property rights, limited government, and citizen privacy, the Court’s conservatives were joined by two liberals to allow the police to enter a private home without a warrant, even if one resident says they cannot enter, because another resident said they could enter.

In other words, if the police get a resident of a home to grant permission to enter that home for the purpose of searching for something illegal, which the police now do not have to specify in writing, the police may enter.  What they are looking for could be unknown, or undocumented.  Maybe they are on a fishing expedition, just looking for anything they could use against the person who said they did not want the police to enter.  It seems like planting evidence would be a lot easier, now.  In any event, your home is no longer your castle, if a pissed off teenager inside decides to take out their misplaced teenage aggression against their loving parents.

Seems like a recipe for disaster.

Justice Ginsburg wrote a dissent, noting the obvious erosion in Fourth Amendment rights against illegal searches and seizures that result from holdings like this.  Ginsburg is the court’s most liberal member, an extremist who has spoken out against the US Constitution she is sworn to uphold, and an authoritarian statist who otherwise just loves, loves, loves state power over citizens.

And here’s the really weird stuff: The facts involve “illegal guns,” which in California is anything down to and including a Daisy BB gun, and documented domestic violence.

The person blocking the police from entering the home to search it was the Mr. Wife-Beating Fernandez, a scumbag who held his cringing wife prisoner under brutal circumstances.  After he was momentarily out of the picture and not a direct threat, she allowed the police to search the house, where they found the illegal guns (let’s be clear – California is on the path to making all gun ownership illegal, except by the police, which is otherwise known as a police state, a separate topic).

Thus did Mr. Macho Wife Beater get into even more and more serious trouble with the legal system, and thus did he subsequently attempt to suppress the evidence the police found, which really put him away behind bars for a while.

Ginsburg and other liberals typically trumpet the rights of domestic abuse victims, but here they are clearly ranking them beneath the rights of the gun-owning wife beater.  Weird.

Conservatives like Alito typically champion the rights of gun owners and are split 50/50 on privacy rights.  But here they are so obviously opening up the flood gates of potential abuse by police.  No warrant?  No documentation for probable cause? Husbands and wives typically cannot testify against each other, but here they are now allowed to defy one another in the family ‘castle’ so the state apparatus may enter at will.

Seems like a pretty huge detonation of American citizens’ privacy rights.  Weird.

 

Warmer weather can’t come too soon

What began as a happy trip to the wood shed for a load of seasoned oak in the Fall is now a crabby trudge through deep snow and ice, a drudgery opposite the cheerfulness felt with the first flames to beat back Winter’s early chill.

Spring warmth cannot come too soon.  Naturally, it will arrive, melt the Arctic snow cap occupying my lawn, and probably result in some Biblical flood carrying my home down river to the Chesapeake Bay.

Speaking of floods, and flood insurance, I am hopeful that the insane congresswoman Maxcine Waters will have her bizarre legislation permanently overturned, so that people can either afford to own their homes (something she is not familiar with or supportive of) or the Federal government will buy out the landowners so the societal costs and benefits are not concentrated on just the private property owners.  Government cannot change the social contract in one week.  Well, under liberals it can, of course.  Let’s rephrase that: Government should not restructure the social contract in such a short time that private property owners see their investments destroyed overnight.  That would be good government, something unknown to Maxcine Waters and her fellow liberals.

Do you believe in your private property rights?

Isn’t it intriguing that the establishment wings of both the Democrats and the Republicans believe that your private property rights are actually theirs?

Several weeks ago, the Pennsylvania Democratic Party took a position on natural gas drilling in deep shales, saying that a moratorium on “fracking” is needed. That adds up to the government taking away from you the right and ability to develop a resource on your property, without compensating you and without demonstrating good cause.

When I inquired of a bewildered Democratic operative whether or not the proposed fracking moratorium would include nitrogen, or be limited to just water, he said “I don’t know, I don’t know. I cannot believe they did this. It makes no sense.” To be sure, it’s an indefensible and politically suicidal position. Unsurprisingly, I don’t believe any of the Democrat gubernatorial candidates have adopted this fatally flawed position.

This week, Republican Governor Tom Corbett signed into law a bill that, aside from two deadly sentences, was an otherwise fine solution to a lot of outstanding, unresolved problems associated with deep gas extraction.

Two deadly sentences are an issue, however, because they basically strip landowners\ oil, gas and mineral owners of their ability to negotiate new leases when the prior one has ended. The new law is a theft from you and a gift to a select industry. Gas is a good and necessary industry, for sure, but no more deserving of a free ride on someone else’s dime than you or I.

The arguments made in favor of what I would call ‘forced apportionment’ were ridiculous and laughable, except that so many private property rights have just been in effect taken and handed over to industry, so it is not funny. Apportionment is a term never used before in Pennsylvania OGM, and the 11th-hour two-sentence amendment to the bill lacks a definition of it. Surprise, surprise.

The worst argument is that by being forced into a “pool” of landowners, basically a fragmented production unit, this new law is guaranteeing that landowners will get paid (!). The state minimum payment, by the way. Never mind that you are due that payment already, and you’d prefer to renegotiate an expired lease on your own, thank you very much.

My sense is that these two sentences could cost Governor Tom Corbett his governorship and several lawmakers their seats. State representative Garth Everett and state senator Gene Yaw were the sponsors of the two sentences. Both are from Lycoming County, a place where private property rights are still held dearly and natural gas is plentiful.

How sad that the establishment wing of the Republican Party is so close to the Democrats that they adopt policies that are practically the same….

Next up, the courts will undoubtedly weigh in on this new law. Let’s hope they save the Republicans from themselves.

Texas Oil & Gas Companies Gone Wild – Part 1

Imagine my disgust and fury when out with my son on our hunting camp the other day we discovered four fresh survey stakes with gobs of ribbons placed on our property. No one had permission to enter our heavily posted, heavily surveyed property that adjoins PA State Forest.
Yes, I had been in discussion with a Texas-based company to come and explore the property, but we had signed nothing and they were in the process of negotiating.
So, finding the four stakes, which marked planned drilling and blasting locations, strategically placed around the property, but far enough away from the cabin that we were less likely to find them, conjured up the worst stories we have heard and seen about rogue Texas oil companies that trample on private property rights.
Luckily, I wasn’t present when the “surveyors” trespassed on our property. Had I encountered them, I would have held them at gunpoint until the State Police arrived to cite them for trespass. And I can tell you from personal experience, confronting trespassers out in the woods is uncomfortable and potentially explosive. Unless the trespasser does everything the landowner legally demands, which is a lot, the potential for gun fire is extremely high. People who defiantly trespass are probably violent, too. So the landowner has to be aggressive and controlling, ready to defend himself at any second.
I contacted the company, and their representative told me that — no kidding — my boundary is wrong and he will be happy to have a surveyor come out and fix it.
I am not lying about this. He actually said that.
Our boundary with the Commonwealth of Pennsylvania has been surveyed by both my surveyors and the state’s surveyors, many times. It is clearly marked and has Posted No Trespassing signs along it, closely spaced so that no one can say they didn’t see them.
Interestingly, their stakes were conveniently placed so that they were least likely to be found. And whoever placed them had to walk past a bunch of big yellow Posted signs.
I am preparing the civil lawsuit and the criminal complaint as I write this, and hopefully the company will make good, so I don’t have to rub their thieving name in the dirt.
See, they stand to make a lot of money by finding out what is under my property, but they don’t want to work with me on it, so they tried to steal the information, instead.
And it is sad, because I love Texas.