Monday, May 21, 2012

Property tax hot potato

Here's a sample from this week's rant on property taxes. State Sen. Daylin Leach will be in next week to give his thoughts on how we should reform the current funding mechanism for public education. Where do you stand? I’ve been writing about House Bill 1776 for some time now, and for the most part, the majority of readers have been all in favor. One reader, though, made it perfectly clear that she was not in favor of the bill, which, for you newcomers, redistributes the tax burden for funding public education from the property tax to the earned income tax and the sales tax. “This bill would give all the money for education to Harrisburg to distribute and I don’t want that to happen. I don’t trust Harrisburg to distribute the money,” Sharon wrote last week. “Property tax has been in effect as a means to pay for education since shortly after the civil war. I don’t state this as a reason for not making a change, just as a reminder of howlong previous generations have been paying for future generations. When I do hear people in this area who are opposed to property tax, it usually seems that they are mad because they feel like renters are getting a free ride. I would love it if your paper took the time to explain that all properties are assessed and that taxes are paid on ALL properties, even rentals.” I think you explained it for them just fine. Thank you very much for the email, and mostly for a different perspective. To prove how much of a hot potato this issue is, I hadn’t so much as finished my interview with the sponsor of HB 1776, Rep. Jim Cox, R-129th Dist., when I received a note from state Sen. Daylin Leach, who is in favor of eliminating the school property tax “if we could replace it with an increase in the income tax.” Leach believes it is a bad idea to replace it with an expanded sales tax. Not being afraid of the heat, Leach also stepped forward with an example to clarify his stance. I pointed out in my last column that I didn’t think the expanded sales tax was regressive because it will not apply to government subsidized food programs and to a list of foods approved as healthy choices. I’m not sure if jalapenos were on that list, but it was apparently spicy enough for Leach to take offense. “Second (the ‘first’ in the email was an explanation of what a regressive tax is), as a general proposition, any sales tax is regressive. This is because as you make more money, the necessity and your ability to spend what you make goes down. To give you an example, a person who makes $15,000 per year must spend every cent they earn to survive. Marc Zuckerberg can’t possibly spend the $100 million plus he will earn this year. So if the sales tax rate is 7%, the person making $15,000 is paying 7% of his entire income, whereas Zuckerberg is spending 7% of a tiny fraction of his income. So the poor guy has an effective rate of 7%, Zuckerberg has an effective rate of something like .000002%.” Reasoned argument, Daylin. And that’s why I’m on board with this bill. That 7% sales tax will not apply to that guy's food bill.


Linda Spreeman said...

Unfortunately whatever solution is enacted will have a flaw, somewhere, somehow. What the lawmakers should do - and do it right - is employ due diligence. Reform for the sake of reform may simply be robbing Peter to pay Paul which defeats the purpose. An Income Tax and State Sales Tax increase would be proportionally more fair than the current system. However, having Harrisburg disperse the funds, may cause more issues than we currently have in place. The bigger question is how we got to this situation in the first place? Could it be that school and property taxes were rising faster and not in proportion to salaries? Capping taxes has never been an incentive,and we have individual districts basically heeding their own agendas. Is there a more fair system? Maybe. But it will have it's critics too. The time has come to employ the best minds in the form of an official Task Force. ~Linda Spreeman~

Anonymous said...

HB 1776 may have flaws, but placing taxes on anything other than my property sure would be a big help. Salary and purchases taxation should cover our School's Budget. Property Tax on the Retired with income of $35,000.00 or less can not continue. Our children make three times more than we did when we retired. Our medical bills that are not covered by our private company and our taxes will cause us within the next year or two to sell and then what? Yes, we have planned for the here-after, but what about now?