HARRISBURG (April 2) – Albert Einstein once said that insanity is doing the same thing over and over again and expecting a different result.
Given the less than positive outcomes in the past of efforts to replace school property taxes with other funding sources, some might question state Rep. Jim Cox’s decision to revive the idea.
Referencing Einstein’s observation, the Berks County Republican said the idea behind the soon-to-be-introduced House Bill 1776 is similar to past proposals, but “we have made changes, significant changes.”
While he noted that his legislation “isn’t perfect,” Cox said he’s worked with many lawmakers and organizations to craft a proposal that recognizes the flaws of past bills that resulted in their defeat and improves on those plans.
Between 2000 and 2008, several measures, seeking to eliminate the school property tax in favor of other funding sources, were introduced and ultimately defeated by the state House of Representatives in fairly lopsided votes.
In 2005, then state Rep. Sam Rohrer, R-Berks, pushed a plan that was defeated on a 128-74 vote. In 2006, a similar Rohrer plan, although this time in amendment form, also failed on a 128-74 vote. In 2008, another attempt by Rohrer to replace the property tax with income taxes and expanded sales levies fell on a 148-47 vote.
Those plans generally eliminated the school property tax, as well as school-related earned income taxes and nuisance taxes, replacing them with revenue from a lowered but expanded sales and use tax. Rohrer’s original plan, introduced in 2004, lowered the sales tax rate from 6 percent to 4 percent, but expanded the tax to include most products and services. Later versions of Rohrer’s plans altered the sales tax reduction to 5 percent and trimmed the expansion of taxable goods and services, but also added such things as personal income tax hikes and real estate transfer tax increases.
Republicans and Democrats criticized those proposals for imposing taxes on previously untaxed goods and services, questioning the impact on the state’s economy and claiming many people would end up paying more taxes than the property tax reductions they’d realize.
Cox noted that his bill, which will be introduced this week, currently has more than 50 co-sponsors, with over half of them House Democrats.
“I’m proud to say today that this is not a Republican idea, this is not a Democrat idea, this is an idea for Pennsylvanians… both sides of the aisle, both parties, no parties – this is about the Pennsylvania property owner,” Cox said.
State Rep. Thomas Caltagirone, D-Berks, said he was “100 percent behind” the Cox plan to eliminate what called a “regressive” property tax system. He added that he hoped many of his colleagues, particularly those in urban areas “would take a look at” the bill.
“This is not [Democrat or Republican], this is about people’s issues and people’s problems,” said Caltagirone.
Offering a few details, Cox said his legislation would hike the personal income tax rate from its current level of 3.07 percent to 4.01 percent.
The state sales tax would increase from 6 percent to 7 percent on existing goods and services, and the bill would also expand taxable items, eliminating many of the exemptions contained within current law.
Cox did not supply any specifics about the exemptions, instead saying the list of goods and services to be subject to the state sales and use tax would be “extensive.”
In a press release, Cox said the tax would be expanded to include clothing and footwear that cost $50 or more, non-prescription drugs and food items that are not part of the Women, Infants, and Children (WIC) program.
In addition, the press release indicated the Cox plan would close sales tax loopholes that currently exempt dry cleaning, funeral expenses, amusement parks and other services from the tax. It would close similar loopholes that also exempt newspapers, magazines, flags, gum, candy, and other goods from the sales tax.
“What we’re doing is making this a more fair tax,” said Cox of the plan to eliminate school property taxes.
He and others said, “the broader the tax base, the more fair [the tax] is and the more stable it is.”
Cox, in his memo requesting co-sponsors, explained his legislation would also change the funding formula for school districts.
“Because the distribution of funding to our local schools has been a divisive issue during property tax discussions, this legislation will contain a baseline for distribution, based initially on ADM (Average Daily Membership) times Equalized Mills,” wrote Cox in the memo. “Other components that are likely to become part of our discussion include socio-economic factors such as poverty, disabilities and language barriers.”
Sen. David Argall, R-Schuylkill, who was a member of the House and a Rohrer-supporter when Rohrer attempted to eliminate school property taxes, said he plans to soon introduce in the Senate a companion bill – Senate Bill 1400 – to Cox’s legislation.
“We’ve seen over the life of this hated tax many attempts to change it,” said Argall.
“But we’re still stuck with this same archaic, outmoded unfair property tax system … that’s why we intend to push very hard to make this much needed change a reality,” he said, noting Sens. Mike Folmer, R-Lebanon, and Jeff Piccola, R-Dauphin, have expressed a desire to advance the bill in the Senate.
Several legislators talked about the school property tax burdens of their constituents, but none compared to those cited by state Rep. Mario Scavello, R-Monroe.
“If you built [or bought] a brand new home in Monroe County five years ago you [on average] paid $250,000. That house today is worth $150,000 and your property taxes on that house are about $11,000 [a year],” said Scavello.
“We’ve got about 3,000 empty homes” because homeowner property taxes, in many cases, are more than mortgage payments and people have lost their homes for failure to pay their property taxes, Scavello said.
“More than 10,000 Pennsylvania families lose their homes to property tax sales each year, or are forced to sell to avoid having their homes seized for nonpayment of those taxes,” said David Baldinger, a representative of the Pennsylvania Coalition of Taxpayer Associations, an alliance of 71 taxpayer advocacy groups from across the state.
“House Bill 1776 and Senate Bill 1400 provide the bold action that is required now if these problems are to be solved,” said Baldinger, noting his organization fully supports the bills.
By Chris Comisac
Deputy Bureau Chief