School property tax proposal still up in the air
Author: Plan to tax retirement income instead of property will be yanked without support of seniors
State Rep. Frank Ryan, a 68year-old longtime CPA and newcomer to politics, said Tuesday that he would not move forward with a proposal to eliminate the school property tax in part by taxing retirement income unless seniors embrace the plan.
So far, they have not.
Ryan, who took office two years ago, caused a stir two weeks ago when he outlined a proposal to get rid of school property taxes with a mix of increases to other taxes and a new tax on retirement income, excluding Social Security.
The Morning Call received many emails and phone calls from upset retirees following a story about the proposal.
“People don’t understand that Social Security is not taxed,” said Ryan, a Lebanon County Republican.
Beyond that, he said, his proposal also would exempt from the new retirement income tax any distributions from a retirement plan that are a portion of the saver’s original contribution to the plan — referred to in CPA lingo as the “basis,” according to Ryan.
In situations where the basis could not be determined, he said, the retiree would be eligible to claim a “safe harbor” reduction in the amount of retirement income to be taxed.
Ryan was among more than a dozen state lawmakers from both parties and both chambers of the Legislature who met informally on Thursday and Monday to discuss ways to reduce or eliminate school property taxes. The “work group” is being led by state Sen. David Argall, a Schuylkill County Republican.
Ryan is waiting to receive the final printed draft of the bill he expects to file on property tax elimination.
“I am soliciting input,” he said. “The political risk of this bill is something I have to deal with.”