Mahoney plans tax reform measure
With voters across the state overwhelmingly rejecting proposals to raise earned income taxes and lower property taxes earlier this week, state Rep. Timothy S. Mahoney, D-South Union Township, said Friday he believes the time is right to completely eliminate property taxes, and he plans to introduce legislation that will do just that. Mahoney said he would introduce legislation geared to totally eliminate homeowner property taxes as early as this week in the state House. The legislation will mirror legislation state Sen. Sean Logan, D-Monroeville, announced Thursday he will introduce in the Senate.
During his campaign last year, Mahoney said eliminating property taxes was one of his goals.
“I think everyone is ready. There’s a big outcry in the state of Pennsylvania. What Sean (Logan) proposed makes the best sense,” Mahoney said. “Lets quit playing around with putting Band-Aids on the problem.”
Logan said in a press release that the voters spoke loud and clear. “They don’t want partial property tax relief or complex tax shifts. They want property taxes eliminated,” Logan said.
Logan’s STOP (Stop Taxing Our Properties) proposal, Senate Bill’s 717 and 718, would totally eliminate property taxes on primary residences by generating $7.7 billion through the use of gaming proceeds, establishing a graduated income tax rate and increasing the state’s sales tax by 1 percent.
“For decades, citizens have called for basing school taxes on one’s ability to pay,” Logan said. “Establishing a graduated income tax scale is the most equitable way of achieving that goal.”
Logan said taxpayers who make less that $100,000 per year would keep the state’s current 3.07 percent income tax rate and see no income tax increase. The highest income level under his proposal ($400,000 or more) would pay an additional 4 percent in income taxes.
Mahoney said the proposal calls for increasing the state’s sales tax from 6 percent to 7 percent, except for in Allegheny and Philadelphia counties, where the rate would increase from 7 to 8 percent. Mahoney said the proposal is “tax shifting” but it is on everybody.
“It’s not just putting the burden on property owners,” Mahoney said.
All of Pennsylvania’s neighboring states have graduated income tax rate scales.
Also on Thursday, House Majority Leader H. William DeWeese, D-Waynesburg, said he plans to introduce legislation that would increase the state sales tax by one-half percent statewide, using the proceeds for dollar-for-dollar property tax cuts totaling $712 million statewide.
DeWeese said the plan is clean, clear, direct, easy to understand, easy to explain and would deliver real and meaningful property tax cuts to homeowners.
“While I realize that there are many plans that will raise myriad taxes to either cut or abolish property taxes, I have watched for 30 years as we sacrificed the possible while waiting for the perfect. It is my hope that this simple, straightforward bill will be the beginning of a real debate on what is possible in our effort to cut property taxes,” DeWeese said. “Paired with the anticipated $1 billion in revenue from gaming, this sales tax boost will enable all homeowners to see real, significant and immediate relief.”
DeWeese is seeking co-sponsors for the legislation.
Mahoney said he appreciates what DeWeese is proposing, but he wants the complete elimination of property taxes.
“I want to go all the way. I don’t want to go half way,” Mahoney said.
Backed by numerous western Pennsylvania lawmakers, Logan has championed the STOP proposal since 2003. The STOP organization, founded by former Pittsburgh radio personality Bob Logue, has gathered 118,374 statewide signatures calling for the elimination of homeowner property taxes.
Logan said his proposal calls for two changes to the state’s Constitution. One would allow homeowner property to be taxed at a different rate than business property. The other would allow for the graduated income tax rate scale.
In a memo Logan sent to all Senate members, he informed all members that he is reintroducing a two-bill package that would eliminate the property tax in Pennsylvania. The first bill would be an amendment to the Constitution that would accomplish two goals in separate referendum questions. The first would ask voters to approve taxing properties differently, continuing to tax commercial and industrial properties and eliminating property taxes on primary residences. A second question would ask voters if they would approve changing the state’s personal income tax from a flat 3.07 percent to a graduate income tax scale.
According to Logan, if both questions are successful, about $7.7 billion would be needed, which is property tax totals for local, county and school districts on primary residences only. In the second of the two-bill package, Logan plans to propose to replace the lost revenue using a graduated income tax rates that would not include an income tax increase for taxpayers making up to $100,000 per year and increases of 1 percent (up to 4.07 percent) for those making between $100,000 and $150,000; a 1.25 increase (up to 4.32 percent) for those making between $150,000 and $200,000; a 1.6 percent increase (up to 4.67 percent) of those making between $200,000 and $250,000; a 2 percent increase (up to 5.07 percent) for those making between $250,000 and $300,000 a year; a 2.75 percent increase (up to 5.82 percent) for those making between $300,000 and $350,000 a year; a 3.5 percent increase (up to 6.67 percent) for those making between $350,000 and $400,000 a year and a 4 percent increase (up to 7.07 percent) for those making more than $400,000 per year.