Eliminate property taxes in Pennsylvania once and for all

There have been discussions about eliminating property taxes for decades.

In November 2017, a constitutional amendment passed by substantial margin to allow for the elimination of property taxes. With that amendment, it would only be necessary for legislation to be enacted to rid the Commonwealth of this regressive tax.

The question then becomes what is the status of the bill to eliminate property taxes?

In December 2018, I circulated a co-sponsorship memo in the PA House for a bill which will eliminate property taxes 100% for all properties if enacted. The objective of the bill is simple — to eliminate all property taxes. The tricky part is the replacement tax.

That very simple statement will be the subject of eight detailed articles I intend to write explaining the issues in detail to solicit your feedback and to allow the best possible solution to come about as quickly as possible. The eight articles will include:

1. Critical economic reasons for eliminating property taxes.

2. Problems with the existing property tax system.

3. Unfunded pension liabilities.

4. Funding formulas for school districts under current laws.

5. Property tax elimination and impact on senior citizens.

6. Property tax elimination and impact on working families.

7. Property tax elimination and impact on schools and teachers.

8. Proposed property tax elimination bill.

Eliminating the property tax is critical to the economic survival of the Commonwealth and our citizens!

In my 40+ years as a certified public accountant and expert in helping organizations avoid bankruptcy, I can think of no more complicated problem to the financial survival of the Commonwealth than eliminating property taxes.

The reason this is so complicated is because our current system of taxation and funding schools is so fundamentally flawed that even minor fixes to peripheral elements of the system may have significant unintended consequences.

The Independent Fiscal Office five year outlook provides an insight into Pennsylvania’s stagnant growth and substantial budget shortfalls over the next five years. When combined with declining population for citizens under age 60 and significantly increasing population for citizens over 65, the trends continue to be negative for the Commonwealth.

If we take decisive action now to reform our tax policies for working families, seniors, businesses, and school districts with the fundamental shift in the elimination of property taxes we can reverse these negative trends. I am extremely optimistic if we take the problem seriously.

Efforts in the past to eliminate property taxes have not been successful because of a whole bevy of reasons.

The primary reasons for the failure of prior efforts revolve around the following:

A. The proposed replacement taxes involve funds going to the Commonwealth rather than to local control.

B. The impact of property tax elimination on people who rent rather than own their homes.

C. The perceived lack of stability in school funding under the replacement formula.

D. The expansion of the sales tax base was a problematic for some powerful stakeholders.

E. The proposed replacement taxes were directed predominantly at working families.

I cannot emphasize enough how severe the problem is with property taxes. The funding formula itself which is a separate issue is equally problematic and leads to the difficulty in solving this problem. It is critical however that everyone understand that if we do not resolve this problem together the probability of surviving the next economic downturn is limited.

We cannot afford to make a mistake.