PA Chamber Government Affairs Director Neal Lesher offered the business community’s perspective on the impact of property taxes on employers at a Senate Education hearing last week.
He stated that taxes paid by businesses account for a significant portion of overall property tax revenue in Pennsylvania – in fact, the Independent Fiscal Office noted that in FY 2020-21 rental and commercial properties contributed $6.4 billion, nearly 41 percent of the overall school property tax revenue generated. That staggering amount also means that property taxes make up a sizable share of the total tax burden that businesses carry. The Council on State Taxation has found that property taxes paid by businesses total $13.2 billion and account for 36 percent of the total business tax burden in the Commonwealth. Of course, Pennsylvania’s high tax burden makes the state becomes less competitive and attractive to investment, which means fewer jobs and less overall economic growth.
Lesher provided background on the PA Chamber’s position on previous laws, noting our organization supported Act 1 of 2006, which limited local school districts from increasing property taxes beyond the rate of inflation but had so many exemptions it was virtually ineffective; as well as Act 25 of 2011, which removed a number of the exemptions from Act 1 to provide more meaningful protections for taxpayers. He also responded to a discussion on growing school district fund balances that has gained increased attention in recent years and called attention to the case of Wolk v. Sch. Dist. of Lower Merion in which the school district agreed to return $27 million to taxpayers.
Lesher also commented on property tax assessments and the practice of spot appeals in which some taxing authorities evade the prohibition of spot property assessments by filing appeals, targeting businesses with unpredictable property tax increases. The PA Chamber supports legislation to prohibit spot appeals except under specific, legitimate circumstances and our organization has long held that county property assessments should occur regularly and uniformly.
He concluded by highlighting other tax reforms that can improve PA’s business competitiveness – including improving the treatment of Net Operating Losses; accelerating the reduction of the Corporate Net Income Tax; and building on small business tax reforms, including removing the accelerated sales tax pre-payment requirement, allowing for bonus depreciation and allowing small businesses to carry forward net operating losses as well.