Senator Argall and Representative Heffley sponsored a legislative hearing on property tax reform this afternoon in the old Lehighton High School auditorium. The room was full of mostly retired people, and they politely listened to a lecture on the history of property tax reform, heard proposals to change the tax, and sat through a powerpoint presentation by the head of the Pennsylvania Coalition of Taxpayer Associations advocating complete elimination of property taxes.
In discussing any tax reform, it helps to make a list of governmental revenue sources--income tax, sales tax, property tax, the lottery, “sin taxes” (on booze and cigarettes), license fees, and so on.
Beside that list make columns for various ways to evaluate the source. Is it progressive, flat, or regressive? Is it easy to collect? Is it affordable? Would it provide a good revenue stream? Does it promote worthy social goals?
This can get complicated. For example, income tax taken out of one’s paycheck is easy to collect. It may be more difficult to collect from a self-employed contractor who does jobs for cash. A sales tax is often thought of as flat, but it is regressive because poor people pay a higher percentage of their yearly income in sales taxes than rich people pay.
Some revenue sources are unambiguously bad. The lottery is one. True, it is easy to collect--fools actually line up to spend their money. From a societal point of view, however, the lottery is a disaster, encouraging people to waste their money on a pipe dream rather than saving and investing it. In addition poor people are much more likely to buy tickets than are wealthy people, making the lottery one of the most regressive revenue sources we have.
Now, finally, the property tax. Is it based on ability to pay? No. A retiree may live on a fixed income in a large house with a high property tax. Is it fair? Not really. Counties are supposed to reassess periodically, but many don’t. Tremendous disparities in assessed values can occur between nearly identical properties. Does it provide a good revenue stream? It depends. If you live in a school district in which the average property is worth $100,000 that adjoins a district with a $300,000 average property value, the low value district would have to tax its property owners three times as much as the rich district to stay even.
Tomorrow: Could the property tax be eliminated, and what would replace it? Stay tuned.
The panel has very high expectations and I wish them all the luck in the world. Our society just does not react to these matters. They sit back and complain about taxes, but do not take any active interest. Like its a way of life. It will be a hard sell. If and when Property taxes are eliminated (not relief) the revenue must be replaced. That will be the sell to the public that is simple. Everytime tax relief was enacted with new taxes it never eliminated property taxes. That's why they much be abolished. Never to come back again.
ReplyDelete