Reform local property tax
An effort to eliminate school property taxes ended this year in a 24-24 deadlock in the state Senate. Now one of the idea’s principal champions, Republican state Sen. David Argall of Schuylkill County, thinks the Legislature will get past that deadlock in 2017 and finally eliminate school property taxes.
He and fellow supporters have not yet revealed a specific bill, but according to Mr. Argall, Pennsylvanians want the change.
“They know that the property tax system is old, it’s archaic, it’s rotten at the core. The only way to fix it is to eliminate it, and that is our number one goal for next year,” Mr. Argall said.
There is zero doubt that the Legislature must diminish the role of local property taxes in funding public education and shift that burden to the state government, which has the broadest possible tax base. And there should be a major reduction in property taxes as a result. But the state government should not eliminate property taxes because doing so would create its own set of problems.
The bill that produced the deadlock this year would have eliminated the school property tax. It would have replaced about $13 billion that it generates each year by increasing the state personal income tax from 3.07 percent to 4.95 percent, and increasing the sales tax from 6 percent to 7 percent and applying to a host of goods and services that are now exempt.
Although no one would mourn the property tax’s death, it would create an equity issue. The tax’s elimination would constitute a massive tax break for wealthy residents and a relatively modest one for most taxpayers, making it a tax shift in more ways than one.
And there is the question of adequate school funding. In addition to the income and sales tax increases, the bill that failed this year authorized a school district wage tax, but only if approved in each district by local referendum. Good luck with that.
Property tax reform is long overdue; Mr. Argall and his colleagues deserve credit for pursuing it. But the result should be a massive shift of the burden to state government that recognizes the need to fully fund education. That, in turn, means retaining a modest property tax as part of fairly distributing the burden while allowing school districts to meet their needs.