Pennsylvania lawmaker: Retirement tax still on table

HARRISBURG — State Rep. Frank Ryan, author of a controversial proposal to eliminate the school property tax by increasing other taxes and instituting a new tax on retirement income, said Tuesday he will continue to promote the concept despite stiff resistance in the Lehigh Valley.

Ryan held a news conference in the Capitol Rotunda to field questions about the concept, which was publicized about a month ago even though the Lebanon County Republican has not formally filed a bill.

Ryan said he will drop the proposal if he does not get significant support from seniors. Feedback he has received to date, he said, indicates about half of seniors have a favorable view of the concept, but the percentage of seniors who are opposed is greater in the Lehigh Valley than elsewhere.

Ryan has attributed that pushback in part to misunderstanding of the proposed retirement income tax, which he said will exclude Social Security and the original amount contributed to a retirement plan, taxing only the earnings on the original contributions.

One component of his tax shift scheme is a local personal income tax of 1.85% to be paid directly to the local school district, in addition to the 3.07% personal income tax already paid to the state.

A second component is a local, additional sales tax of 2% on items already subject to the state’s 6% sales tax. Separately, a new, local sales tax of 2% would be levied on food and clothing, which are currently are exempt from state sales taxes, and would remain so.

The most controversial component, Ryan acknowledged, is his proposal to tax retirement income, excluding Social Security, at 4.92%.

School property taxes raised about $15 billion for school districts last year, and Ryan said that figure is increasing by about $500 million a year.

Proposals to eliminate or reduce property taxes by increasing others have been around for decades.

Ryan is one of about 15 state lawmakers who have met informally as a group this month to attempt to create a plan to deal with the property tax issue when lawmakers return to Harrisburg next month.