It’s about time
If the measure of tax fairness is ability to pay, then property taxes are flatly unfair. They also are wildly uneven.
We refer to the fact that folks on fixed incomes — senior citizens for the most part — can’t keep pace with rising property taxes because many of them are no longer earning salaries that likewise are on the rise. Instead, the tax eats into meager retirement income that’s already budgeted for food, medicine, utilities, clothing and other staples. Thus, some seniors face the prospect of being forced from homes because of taxes they no longer can afford. What’s more, the tax can fluctuate significantly within the same neighborhood depending on when a property was purchased and if it’s been improved.
But taxpayers aren’t the only victims of this obnoxious levy. The quality of education also fluctuates wildly across the state as school children in depressed areas — those most in need of a well-funded educational experience — are housed in the shabbiest buildings, taught with worn and dated materials by the lowest-paid and, therefore, the least motivated teachers. This is because property taxes in urban and rural areas where property values are low raise the least amount of revenue; and the state funding formula, which is supposed to level the playing field, doesn’t come close to making things right.
It’s why property tax reform has been a regular focus of attention for years — unfortunately, without success. And so, opponents are taking another stab at eliminating the tax from school district tool boxes. We wish them luck.
Appropriately named the Property Tax Independence Act, House Bill 1776 would trade the state’s $12 billion in annual property tax revenue for new revenue from a higher personal income tax and higher sales taxes. The author of the bill, state Rep. Jim Cox, R-Berks, said his plan would hike the personal income tax from 3.07 percent to 4 percent and raise the sales tax from 6 percent to 7 percent. In Philadelphia and Pittsburgh, the sales tax would go from 7 to 8 percent. If enacted into law, the bill also would eliminate most exemptions to the sales tax, although clothing costing less than $50 and food items would remain tax-free.
Among the bill’s supporters are Bucks County state Reps. John Galloway, D-140, and Tina Davis, D-14 and Fayette County’s Tim Mahoney, D-51. We’re glad to see that the representatives have not allowed party labels to stand in the way of having a conversation that lawmakers need to have.
“There are a ton of questions regarding this idea,” Galloway said in an email to the newspaper, noting that the issue is big and so is the risk of tackling it. “But the reward seems huge,” Galloway added, concluding, “I want to be part of this.”
We’re glad to hear it.
We likewise encourage all Bucks legislators to be part of the debate. This is not a minor matter. And so it deserves a comprehensive and meaningful review. As Galloway points out, it would “fundamentally change the way we fund our schools.”
We believe it would be a fairer way because both income and consumption taxes are based on the ability to pay. The down side is that when consumption and income decline during hard economic times, such as those we are experiencing now, tax revenue also would fall. It’s a significant deficiency requiring close attention.
Nonetheless, the Property Tax Independence Act is a worthy proposal. It is both revolutionary and timely. And lawmakers owe it to their tax-weary constituents to give it their time and attention.