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Eliminate property taxes to fund schools in Pennsylvania: Mike Folmer

Posted 6/5/19

I’m proud to stand with Sen. David Argall and other Senate colleagues in supporting Senate Bill 76 to eliminate school property taxes because I believe no tax should have the power to leave you …

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Eliminate property taxes to fund schools in Pennsylvania: Mike Folmer

Posted

I’m proud to stand with Sen. David Argall and other Senate colleagues in supporting Senate Bill 76 to eliminate school property taxes because I believe no tax should have the power to leave you homeless.

SB 76 is the only plan being offered today to totally eliminate school property taxes — not partial reduction, not elimination for some but not all taxpayers, and not a new program to lessen property tax burdens. SB 76 provides for the total elimination of school property taxes.

Taxpayers have been — and continue to be — generous in their support of Pennsylvania education. Local school property taxes across the commonwealth over the next two years will cost taxpayers an estimated $14.22 billion. This is in addition to state and federal tax money.

It’s only a matter of time before the current system to fund education becomes unsustainable and completely overwhelms taxpayers. Every year, school property taxes rise by about $500 million. At the same time, the cry for total elimination of these levies also grows. It’s probably why voters approved a 2017 amendment to the Pennsylvania Constitution to expand the so-called “homestead exemption.”

This exclusion provides for the 100 percent elimination of the assessed value of each owner-occupied property (previously, the exemption was 50 percent of the median assessed value of homestead properties). The homestead exemption does not include commercial and retail properties, rental and vacation properties, or factories and industrial facilities. It also gives another option in the much needed and long overdue goal of eliminating school property taxes.

To eliminate more than $14 billion in school property taxes, you need alternative revenues. There are just four realistic options for replacement moneys: personal income tax, earned income tax, sales tax or some other — new — tax.

A homestead only exemption requires about $8.5 billion in alternate taxes.

SB 76 eliminates school property taxes using three of these four options: expand the personal income tax and sales tax to replace school property taxes dollar-for-dollar while giving schools the ability to raise additional revenues through either a local personal income tax or earned income tax — after voter approval.

Each 0.1 percent increase in the personal income tax generates about $400 million in replacement revenues. A 1 percent sales tax increase from 6 to 7 percent (7 to 8 percent in Allegheny County and 8 to 9 percent in Philadelphia) raises about $1.7 billion and an expansion of the base raises even more.

Admittedly, expanding the base is what causes much of the opposition to the plan. However, the proposed expansion would exempt clothing costing less than $50 and would not include food items on the WIC list: fruits and vegetables, milk, cheese, yogurt, juices, infant food, whole wheat breads and grains, breakfast cereals, peanut butter, and eggs.

The proposed expansion would include foods with little nutritional value: sodas, fruit and sports drinks, cheese spreads, and foods with added sugars, fats, salt, or oils.

To calculate how an expansion of the sales tax changes would impact you, look at how much you now pay in school property taxes. For each $1,000 in current school property taxes, you would need to spend an additional $14,285 on the newly taxable goods or services.

Some critics of this plan focus on a proposal to protect schools: retaining some property taxes to cover outstanding debt. Such claims are misleading as once current debts are repaid, all school property taxes would be eliminated.

The clock is ticking. Property taxes continue to rise and taxpayers continue to bear the burdens. There’s just one plan to completely eliminate school property taxes: Senate Bill 76, which I support because no tax should have the power to leave you homeless.

Mike Folmer is a Republican member of the Pennsylvania Senate whose 48th District includes Middletown. His Capitol office telephone number is 717-787-5708.