Posted: Sunday, July 28, 2013 7:00 pm | Updated: 11:14 pm, Sun Jul 28, 2013.
Lower Bucks County residents are lining up their questions for Monday’s Property Tax Independence Act community meeting hosted by Rep. John Galloway, D-140.Galloway, who has been a strong proponent of eliminating property taxes, will take the public’s questions and concerns regarding the proposed bipartisan HB76, which calls for the elimination of all school property taxes across the commonwealth, and replacing those taxes with funding from personal income taxes, and the sales and use taxes.The legislation is designed to be tax revenue neutral.
The meeting, which is open to the public, will start at 7 p.m. at Bristol Borough hall, 250 Pond St. The meeting will be televised, so Bristol residents can watch it live from their homes.
The public can submit questions to Galloway’s office until 5:30 p.m. the night of the meeting through his webpage, www.pahouse.com/galloway, facebook, www.facebook.com/RepGalloway, or twitter.com/repjohngalloway.
Berks County resident David Baldinger, who administers a Web-based taxpayer organization, Pennsylvania Taxpayer Cyber Coalition, will speak at the meeting.
He became involved in the effort in 2004 and since then has become one of Pennsylvania’s leading experts on property tax elimination issues. His website is www.ptcc.us, where HB76 is explained in detail.
Morrisville resident Robert Allen, 63, believes the legislation would benefit taxpayers across the commonwealth, especially seniors who live on limited incomes.
He said if property taxes continue to increase, he might be forced to leave his house.
“It’s a weight I constantly have in my head,” Allen said. “I’m not trying to get out of paying my taxes. I’m willing to pay my fair share.”
Bristol school board President Ralph DiGuiseppe III said at last week’s meeting that the idea in theory sounds good, but he’s concerned about how it would affect smaller districts such as Bristol.
“We can all agree that eliminating school taxes is nothing but a huge positive to anyone who owns a house and all taxpayers,” DiGuiseppe said. “The downside that nobody is addressing is what’s going to happen to little Bristol Borough … when you have a district no longer setting the budget or implementing taxes to keep up with special education (costs), teachers’ salaries and (building maintenance.)”
All that is being guaranteed is the coverage of cost of living, he added.
Rep. Jim Cox, R-129, who is the prime sponsor of the bill, wrote in a memo to the House earlier this year that the proposed legislation has been meticulously crafted to ensure the tax swap provision of the plan doesn’t raise more than is already collected by the school property tax mechanism. And that the taxes would be replaced dollar-for-dollar in each district without arcane formulas that redistribute wealth.
“The Property Tax Independence Act’s revenue replacement mechanism moderately broadens the base of the state sales tax to include more services and products at a new 7 percent rate,” Cox wrote in the memo. “Pennsylvania currently has one of the narrowest sales tax bases in the nation and broadening of the base is a powerful key to adequate revenue generation. Life necessities and business-to-business transactions will continue to be exempt from the sales tax.”
While the sales tax would generate almost two-thirds of the proposed legislation’s revenue, the remainder of the funding necessary to replace the school property tax would be generated by a “modest increase” in the state personal income tax from 3.07 percent to 4.34 percent, Cox explained.
He argues that the two taxes would be predictable and provide a stable funding source that would automatically increase revenue in sync with economic growth; unlike the current system that’s not based on economic growth, and is subject to annual tax increases.
Additionally, unlike the property tax that has no relationship to family income, both the sales tax and the personal income tax are directly tied to a person’s ability to pay, Cox said.
If the legislation passes, the plan would be to eliminate the school property tax during a two-year phase-out.
In the first fiscal year after enactment, school property taxes would be frozen at their current level. Then, in the second year the school tax would be completely eliminated except for a small portion that would be retained in each school district to retire the individual district’s outstanding long-term debt, Cox said.
The legislation would eliminate school boards' ability to increase taxes. It wouldn’t impose any new mandates of any kind on school districts.
“The only exception would be a possible local earned income tax or local personal income tax for major projects such as new school construction, and that will be subject to a no-exception taxpayer referendum,” Cox wrote in the memo.
Cox is adamant about the legislation because homeowners of all ages are facing hardship because school property taxes continue to rise at a rate of more than three times that of inflation.
“Polls of real estate professionals have indicated that through the elimination of the school property tax – the greatest portion of the monthly escrow and an amount that in some areas can equal the mortgage payment – Pennsylvania’s real estate market would explode with new buyers,” Cox wrote in his memo.
The meeting, which is open to the public, will start at 7 p.m. at Bristol Borough hall, 250 Pond St. The meeting will be televised, so Bristol residents can watch it live from their homes.
The public can submit questions to Galloway’s office until 5:30 p.m. the night of the meeting through his webpage, www.pahouse.com/galloway, facebook, www.facebook.com/RepGalloway, or twitter.com/repjohngalloway.
Berks County resident David Baldinger, who administers a Web-based taxpayer organization, Pennsylvania Taxpayer Cyber Coalition, will speak at the meeting.
He became involved in the effort in 2004 and since then has become one of Pennsylvania’s leading experts on property tax elimination issues. His website is www.ptcc.us, where HB76 is explained in detail.
Morrisville resident Robert Allen, 63, believes the legislation would benefit taxpayers across the commonwealth, especially seniors who live on limited incomes.
He said if property taxes continue to increase, he might be forced to leave his house.
“It’s a weight I constantly have in my head,” Allen said. “I’m not trying to get out of paying my taxes. I’m willing to pay my fair share.”
Bristol school board President Ralph DiGuiseppe III said at last week’s meeting that the idea in theory sounds good, but he’s concerned about how it would affect smaller districts such as Bristol.
“We can all agree that eliminating school taxes is nothing but a huge positive to anyone who owns a house and all taxpayers,” DiGuiseppe said. “The downside that nobody is addressing is what’s going to happen to little Bristol Borough … when you have a district no longer setting the budget or implementing taxes to keep up with special education (costs), teachers’ salaries and (building maintenance.)”
All that is being guaranteed is the coverage of cost of living, he added.
Rep. Jim Cox, R-129, who is the prime sponsor of the bill, wrote in a memo to the House earlier this year that the proposed legislation has been meticulously crafted to ensure the tax swap provision of the plan doesn’t raise more than is already collected by the school property tax mechanism. And that the taxes would be replaced dollar-for-dollar in each district without arcane formulas that redistribute wealth.
“The Property Tax Independence Act’s revenue replacement mechanism moderately broadens the base of the state sales tax to include more services and products at a new 7 percent rate,” Cox wrote in the memo. “Pennsylvania currently has one of the narrowest sales tax bases in the nation and broadening of the base is a powerful key to adequate revenue generation. Life necessities and business-to-business transactions will continue to be exempt from the sales tax.”
While the sales tax would generate almost two-thirds of the proposed legislation’s revenue, the remainder of the funding necessary to replace the school property tax would be generated by a “modest increase” in the state personal income tax from 3.07 percent to 4.34 percent, Cox explained.
He argues that the two taxes would be predictable and provide a stable funding source that would automatically increase revenue in sync with economic growth; unlike the current system that’s not based on economic growth, and is subject to annual tax increases.
Additionally, unlike the property tax that has no relationship to family income, both the sales tax and the personal income tax are directly tied to a person’s ability to pay, Cox said.
If the legislation passes, the plan would be to eliminate the school property tax during a two-year phase-out.
In the first fiscal year after enactment, school property taxes would be frozen at their current level. Then, in the second year the school tax would be completely eliminated except for a small portion that would be retained in each school district to retire the individual district’s outstanding long-term debt, Cox said.
The legislation would eliminate school boards' ability to increase taxes. It wouldn’t impose any new mandates of any kind on school districts.
“The only exception would be a possible local earned income tax or local personal income tax for major projects such as new school construction, and that will be subject to a no-exception taxpayer referendum,” Cox wrote in the memo.
Cox is adamant about the legislation because homeowners of all ages are facing hardship because school property taxes continue to rise at a rate of more than three times that of inflation.
“Polls of real estate professionals have indicated that through the elimination of the school property tax – the greatest portion of the monthly escrow and an amount that in some areas can equal the mortgage payment – Pennsylvania’s real estate market would explode with new buyers,” Cox wrote in his memo.
13 comments:
Fiscal office: Tax reform bill would be an economic boon to Pennsylvania and homeowners
Posted on July 29, 2013
by Carl LaVO
Pennsylvania state government's Independent Fiscal Office released a comprehensive analysis of the proposed legislation co-sponsored by Rep. Galloway. In its analysis, the IFO drew the following conclusions:
•By the fifth year after enactment the Property Tax Independence Act would save more than $1.1 billion annually over the equivalent time period’s increase in property taxes.
•The elimination of school property taxes increases the disposable income of property taxpayers. The analysis assumes that 70 percent of the property tax cut goes to individuals. It further assumes that homeowners spend 90 percent of the increase in disposable income, greatly stimulating Pennsylvania’s economy.
•The elimination of property taxes increases the pre-tax profit of business entities that remit property tax.
•Working age homeowners realize a tax cut. The analysis finds that the increase in federal income tax (through lower itemized deductions), state income tax, and sales tax is more than offset by the elimination of property taxes.
•Retired homeowners realize a significant reduction in taxes. The analysis finds that the property tax reduction easily offsets any increase from the higher sales tax.
•Elimination of the school property tax would increase home values, on average, by greater than 10 percent statewide.
•The elimination of property taxes would significantly reduce the property tax share and would clearly increase the attractiveness of the commonwealth for business location and expansion.
•Benefits would also accrue to home builders, home developers and other land owners who convert current land holdings into new housing plots. Employment would increase in the construction sector as well.
Source: Rep. Jim Cox, R-129, January memo to House of Representatives
This is getting a full propaganda blitz. The greatest thing since sliced bread. Heavy on the benefits. No mention of any downsides or who takes a hit.
5 comments:
StevenMH posted at 12:07 pm on Mon, Jul 29, 2013.
Posts: 1759
Greedy old people don't want to pay back the money that property owners shelled out to send them and their kids through public school.
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Ms D posted at 10:03 am on Mon, Jul 29, 2013.
Posts: 47
I love how people are saying 'Why should we pay for other people's children when we don't have any'. Why is the federal government taking taxes out of my paycheck for social security and medicare? I am on neither of those. And the likelyhood of me getting anywhere near what I put in is absurb. BUT I do believe in it. So people need to get off their high horse and realize that it's for the better of the community.
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leavingpa posted at 12:07 am on Mon, Jul 29, 2013.
Posts: 2
Part of me in very interested in the reform. I also have no children, but forced to pay for others. A few years ago, Courier reported apartment complex paying $250,000 in tax but cost over $2 million for kids in their complex. And that's for only 1 apartment complex. Look how many apartments with kids there are that don't pay their share.
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kathyp678 posted at 9:05 pm on Sun, Jul 28, 2013.
Posts: 50
Ralph doesn't understand that most people cannot afford the school taxes in the borough. We pay some of the highest taxes in Bucks County to sustain the schools and really with the population of this little town we shouldn't even have a school district. These schools are killing us and most of the elderly are having to sell homes because they can no longer afford the taxes. The homestead tax relief isn't enough to make up for what they cannot afford to pay. Ralph doesn't live in the real world. Bristol is a working class town and we can no longer afford mortgages and taxes to live here and to top it off Bristol Borough is one of the worst school districts in Bucks County with some of the lowest scholastic test scores not just PA but the country. I live in a row home and pay $5,000.00 per year in taxes, $3,600 in school tax for a sub par school district and I have no children in school. It's time for us to make this change. I hope this passes and they get rid of this school district if they can't sustain it without the school property tax.
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klrrdr posted at 8:27 pm on Sun, Jul 28, 2013.
Posts: 17
My wife and I make a lot of money. Now this district wants to tax my income to pay for school stuff and we never had kids. This tax will probably cost us more than the property tax cost. Just what people need is yet another fiscally irresponsible government entity with their hands in our pockets. Eliminate all the non essential programs, get rid of all the redundant jobs and stop putting your hands in my wallet.
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Bristol hosts school tax reform discussion
By GEMA MARIA DUARTE Staff writer
Posted on July 30, 2013
The idea of eliminating school property taxes across Pennsylvania in favor of funding from personal income taxes, sales and use taxes is brewing in Bucks County.
A majority of the nearly 100 people in attendance at Monday’s community meeting, where the proposed legislation H.B. 76 was summarized in an hour, seemed to give it two thumbs up.
The meeting at Bristol Borough Hall was hosted by Rep. John Galloway, D-140, who is a sponsor of the bill. Officials from Bristol, Bristol Township, Tullytown and Falls were present.
The main speaker was Berks County resident David Baldinger, who administers a Web-based taxpayer organization, Pennsylvania Taxpayer Cyber Coalition, and is a leader in the grassroots movement.
Baldinger helped Rep. Jim Cox, R-129, the prime sponsor of the bill, draft the legislation.
The goal of H.B. 76 is to eliminate the school property tax in a two-year phase out period that would lead to stabilization of school funding, and establishing realistic limits on increases in K-12 education spending, he said. Such a move would have to be tax revenue neutral.
The bill calls for an increase in the sales tax to 7 percent, as well as an increase to the state personal income tax from 3.07 percent to 4.34 percent. The sales tax would increase on purchases more than $50.
The bill would strip school boards from making decisions on raising taxes. Instead the decision would be left to voters in a referendum.
So if the district needs extra cash to cover costs, such as teachers contracts or education federal mandates, the district would have to leave it in the hands of the voters.
If the referendum fails, then the district would have to work within its budget, Baldinger said after the meeting.
Bristol Borough School board member Jeff Paleafico agrees with the idea of working within the district’s budget. He said it’s doable.
Earl Bruck, Bristol Township school board member, said he supports the concept, but there are points of the bill that he doesn’t agree with. The proposed legislation wouldn’t meet the future increased cost of education, he said.
The bill would push consolidation of districts across the commonwealth, some in attendance argued after the meeting.
Bruck, who wasn’t at the meeting, but has an economics degree and has reviewed H.B. 76, said consolidation wouldn’t be a bad idea considering that some districts are graduating small classes.
Baldinger said the education system costs taxpayers $24 billion a year; within 10 years that number could balloon to $44 billion. He estimated that property taxes could increase 30 percent in the next two to four years.
“We need to halt this if we want to survive,” he said, adding that homeowners are losing their homes because they can’t afford the taxes.
Bucks County has 6,582 homes with tax liens and 17,630 in foreclosure, he said.
Tax relief revenue sources, such as Act I, are quickly outstripped by “relentlessly rising school property taxes.” Additionally, he said that any property tax relief plan is doomed to fail if the system is not restructured.
“Runaway property taxes are destroying Pennsylvania’s economy, devastating job-producing small businesses and driving away its residents,” Baldinger said.
He said that among the “real problems” of the commonwealth’s taxation system are that it’s antiquated, and property taxes are inherently arbitrary and unfair.
Harrisburg politicians have been talking about reforming property taxes for the past 30 years to no avail, so it’s time for residents to take the lead and demand it, he said.
PART 2 last bit of article
The solution is to replace the school property tax with a more broad-based, equitable funding stream, he said.
Baldinger refers to the proposed legislation as a “clean bill” because it benefits taxpayers, rather than special interest groups.
Baldinger will do another round of explaining H.B. 76 at 7 p.m. on Aug. 13 at the I.M.A. Fifth Ward Club, 1143 Wood St. in Bristol. This event is being organized by the Bristol Borough Tax Association.
I was there last night. I was in an overflow room where it was on live TV. I found it a bit stagey and definitely one-sided. The concept has merit, but there are many unanswered questions and details. Not many questions were answered last night. It was tilted towards presentations and speeches. The message was don't worry about the details, get with the concept and we'll fix it later.
Call me crazy, but I worry about the details, like school funding allocation issues, what happens during economic downturns if sales and income tax revenues slide, etc. I worry about who gets hosed if this becomes law. For example, the working poor who aren't even lucky enough to own homes but would have to pay higher sales and income taxes.
Sorry for the long post, but I wanted to get down a couple things I think I learned from last night and a quick read of the bill.
1. In Year 1 (2014-15), districts would get allocated their 2013-14 "base revenue" (amount of 2013-14 property tax RECEIVED, minus annual debt service payments for debt incurred prior to 12/31/12). For example, in Morrisville, property tax brings in about $10 million, and annual debt service is about $1 million, so we'd get about $9 million in Year 1.
2. In future years, this figure would be adjusted by the Consumer Price Index (CPI). However, last night in his presentation, the PTCC rep David Baldinger said it would be "adjusted by CPI or available revenue, whichever is LESS". I don't quite see that in the bill, but maybe it's in the fine print.
3. For example, let's say in Year 2 the CPI is +3%, but sales and income tax revenues are -5% for some reason, like an economic downturn. Then districts really get -5% in Year 2. The way the bill is written, Year 3's allotment is based on Year 2's allotment adjusted by the CPI (or available revenues, whichever is LESS, if PTCC guy is right). And so on and so on. So a revenue drop in a given year would proliferate for all future years, and the increase any year could never exceed the CPI. Lovely.
4. Individual districts may choose to institute an Earned Income Tax (EIT) or Personal Income Tax (PIT) to raise additional revenue. These EIT's or PIT's must be approved via voter referendum. The referendum must take place at the primary election prior to the fiscal year in which the EIT/PIT is implemented. Primaries are the 3rd Tuesday in May, right? Final school budgets for the next fiscal year must be adopted by June 30.
5. First, that should make the budget process extra tricky. Second, good luck with that referendum. What are the chances of one like this ever passing in Morrisville or many other districts? You can use scientific notation if you'd like (e.g. probability = 1 x 10-23).
6. Districts are allowed to exempt people from the EIT/PIT whose income is less than $12,000/yr. Gee, thanks. You make $12,001/yr, pay up. Welcome to WalMart, you want fries with that? Ouch.
7. PTCC guy claims there is absolutely NO loss of local control. He might believe it, but I don't see how he can honestly make that statement.
8. The sales tax would increase from 6% to 7%, and would be expanded to include all sorts of things not currently taxed, such as clothes (items > $50), food (excluding WIC and food stamps), beverages, candy, gum, newspapers, magazines, haircuts, caskets, burial vaults, tombstones, textbooks, movie rentals, flags, horses, construction materials, etc.
9. I'm not saying these are deal killers, but there are some "devil in the details" issues with this bill.
10. Some local Republican elected officials such as Sen. Chuck McIlhenney (R-10) and Rep. Frank Farry (R-142) are not currently sponsoring this bill. I think I know part of the reason why. It has a whiff of "soak the rich" to it. Above a certain income threshold, you're going to pay more under this bill. I find wealthy people generally don't like that.
Good analysis Jon. I'd like to see some help for low income non-homeowner built in. Exempt the first XX,000 from income tax or something. Could be its already exempted under current tax codes??? You think low income homeowners have it bad. Low income renters and the working poor have it even worse and shouldn't get screwed by this.
Thanks. I don't think there's an income exemption in current PA tax code, which is a flat 3.07%. This bill would increase it by 1.27% to 4.34%. I would be nice if people (all people?, non-homeowners?) with income under a certain threshold didn't have to pay the extra 1.27%, which is a 41.4% increase.
Are you sure you're not a C.P.A.?
Positive.
It appears renters of all ages take a financial hit with this. They don't pay property taxes (at least not directly), but they'll have to pay more in sales and income taxes. How do we reconcile that with the oft repeated goal of preventing the elderly from losing their homes to property taxes?
A. Who gives a crap, my property taxes went down.
B. This is one way for renters of all ages to get some "skin in the game", by having to pay more taxes so homeowners can keep their homes.
C. Their rents will obviously be reduced because altruistic landlords will naturally pass their property tax savings right along to them.
D. JUST COOPERATE.
E. None of the above.
F. All of the above.
G. I'm sorry, I don't speak Spanish.
Check the online comments on the bcct articles. Public opinion is strangely divided. Right wing-nuts who typically march in lockstep with each other are at loggerheads. Dog and cats are living together. It makes me smile through my tears to watch fact-challenged bloviators who normally echo each other trading doses of their own dopey medicine.
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