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.