Elim­i­nate prop­erty taxes in Penn­syl­va­nia once and for all

The Times Herald (Norristown, PA) - - OPINION - By Rep. Frank Ryan

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.

Frank Ryan, CPA, USMCR (Ret.) rep­re­sents the 101st Dis­trict in the Penn­syl­va­nia House of Rep­re­sen­ta­tives.

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