Voters be wary of referendum
Area voters have good reason to be leery of the referendums they’ll face on the May 15 ballot concerning imposition of higher earned income taxes as a means to offset school district property taxes. Our concerns are many, but first and foremost, please keep in mind the old adage that, “If something sounds too good to be true, it probably is.” This proposed tax shift is a creation of the Pennsylvania Legislature, which, under enormous pressure from a dissatisfied public, simply decided to pass the buck. The Legislature’s solution to a thorny problem was to push the problem down to local school districts, requiring them to put a question on the ballot asking voters to approve a hike in the earned income tax for a modest reduction in school district property taxes.
In our area, the proposed hikes range from .4 percent to 1 percent, and would reduce taxes on qualified residential and farmstead properties by between $147 and $313. The latter numbers are more concrete and may have great appeal to property owners, particularly senior citizens, but households need to do the math on the proposed earned income tax hike before discovering whether this is really a deal.
As with any tax shifting, there would be winners and losers. In this case, the winners are senior citizens and low-income people who own their own homes; the losers are essentially everybody else.
In the Uniontown Area School District, for example, the tipping point would come when household earned income reaches $46,000. Anyone earning less would profit from the tax shift, while anyone earning more would suffer, according to UASD Business Manager Floyd Geho.
The straight-shooting Geho sums it up better than we could: “It’s really unfair to tap wage earners to pay for tax relief our legislators forced on the school districts.”
And even if voters think a tax shift is a good idea, it’s supremely unfair that all local school districts, in following the state mandate to put the question on the ballot, ignored asking for voter approval of a hike in the personal income tax. That wider category includes not just wages, but other barometers of household wealth, such as interest from investments, such as bank CDs and savings accounts; profits from one’s business, profession or farm; rental income; money from estates or trusts; and, yes, even lottery winnings.
Using the aforementioned Uniontown example, say there are two households in that district pulling down $46,000 a year. Household No. 1 has two people working and two school-aged children, so all of its annual income is derived from earned income. Household No. 2 consists of a retired couple, whose income is derived from Social Security, a pension check, interest on money kept in a local bank and rents from other properties they own.
What’s fair about significantly raising taxes on Household No. 1 but not Household No. 2, when they’re both worth the same amount? Craig McKee, who served on Laurel Highlands School District’s Tax Study Commission, correctly notes that, “This benefits the person with no (earned) income that owns their own house” and nobody else.
Be aware of that cold, hard fact on May 15.