Some lawmakers are pushing misguided legislation that would simply shift tax burdens from one segment of the taxpaying population to the other under the guise of so-called “property tax reform.” The bill in question aims to eventually eliminate school property taxes by significantly increasing and expanding sales and personal income taxes by as much as 17 and 65 percent, respectively. This tax shift could be financially devastating to small businesses and working families, who would see costs spike on services and everyday goods. The PA Chamber is committed to defeating this irresponsible measure.
The PA Chamber fights every day to reduce the tax burden on Pennsylvanians and therefore certainly understands why people are so frustrated with property taxes: many areas of the Commonwealth have consistently experienced very high school property tax increases. Unfortunately, S.B. 76 simply shifts the burden to others without actually addressing the core problem of unsustainable cost-drivers and unfunded mandates. In fact, the legislation doesn’t even accomplish its stated goal of property tax elimination, as more than 97 percent of school districts would be able to still assess property taxes in order to pay down debt. The state Independent Fiscal Office has also found that any replacement for school property taxes would need to generate $12 billion in revenue, an amount that will go up by $1 billion each year. Given the lower than expected revenue returns over the 2016-17 fiscal year, it should be clear that income and sales taxes are too volatile to replace the reliable revenue stream that school property taxes have brought in for generations.
In addition to immediate financial strain, Pennsylvania faces significant long-term challenges, including demographics that show the state population aging. The consequences could be dire if this trend continued unabated, which is why Pennsylvania needs policies that help young families and professionals. The fact is, older and retired Pennsylvanians would generally benefit the most from S.B. 76, as many would experience some property tax relief while enjoying the benefits of tax-free social security and retirement income. Meanwhile, younger generations of taxpayers – many of whom are young working families with children to care for – would be forced to pick up the tab – paying higher income taxes, sales taxes and new taxes on many essential day-to-day items – things like diapers and children’s Tylenol.