Proposed House Bill 1776, called the “Property Tax Independence Act,” would eliminate property taxes as a source for public education funding in Pennsylvania.
The bill, sponsored by Rep. Jim Cox (R-Berks), calls for increases in income taxes and sales taxes as alternative means of revenue.
The income tax rate (now at 3.07 percent) would increase to 4 percent, while sales taxes would jump 1 point from 6 to 7 percent (and to 8 percent in Allegheny County, where the sales tax is already 7 percent).
In addition, a sales-tax exemption on many goods and services would be eliminated, such as on dry cleaning, funeral expenses, amusement parks, gum and candy, flags, magazines and newspapers.
Cox estimated in a Post-Gazette interview that all of these measures would generate $9.6 billion, coming close to the $10 billion needed to make up for a property-tax revenue loss.
The remaining money would come from existing slot machine revenue taxes, he said.
Cox drafted the bill with the intention of protecting homeowners from debilitating property taxes, he said.
“No tax should have the power to leave you homeless. We have to end the practice of kicking senior citizens and widows out of their homes because they cannot afford to pay their property taxes.”
According to David Baldinger, head of the Pennsylvania Taxpayers Cyber Coalition, more than 10,000 Pennsylvania families lose their homes each year because of unaffordable property taxes.
In the past, proposals to fundamentally change the tax structure have been voted down, including a 1988 referendum to get rid of property taxes by raising other taxes.
For this reason, representatives on both sides of the party line are hesitant about the recently proposed tax shift.
The Pennsylvania School Boards Association said that they do not support the complete elimination of school property taxes, but support diversified means of taxation.
Guest commentary appearing on PoliticsPA today discusses the need for a replacement to the current property tax system.
Tumultuous economic times have already been cruel to public education, and have left many wondering how school budgets will be impacted if the proposed restructuring of the tax system passes.