HARRISBURG — School property taxes cost Pennsylvania homeowners billions of dollars each year, but lawmakers are hoping a simple copper penny will be enough to finally erase the controversial levy from the books.
Two dozen Republican and Democratic lawmakers unveiled legislation Tuesday to replace the $10.4 billion collected every year in school property taxes with new revenue generated by increases in the sales and personal income taxes.
Pennsylvania has been unsuccessfully waging the property tax debate for decades. If legislation being proposed in the House and Senate are approved, the sales tax would rise from 6 to 7 percent and the personal income tax would go from 3.07 to 4.34 percent.
To Rep. Jim Cox, R-129, that amounts to a one-penny increase on a $1 purchase, and a 1.27-cent increase for every $1 earned.
“I find it very difficult to believe that a penny ... will keep (Pennsylvanians) from having their legislators do what needs to be done to eliminate their school property taxes,” Cox, the chief sponsor of House Bill 76, said.
Sen. David Argall, R-29, is writing Senate Bill 76 for his chamber.
“This outmoded, archaic, unfair system has to be eliminated,” Argall said.
The legislation would use existing gambling revenues to help replace the $10.4 billion that is now generated by school property taxes. Additionally, things that are not now taxed — like candy and gum, newspapers, textbooks, personal care services, basic TV subscriptions, and theatre tickets — would be added to the sales tax levy.
If approved, lawmakers contend someone would have to spend $70,000 on the newly taxed items to equal the elimination of a $5,000 school property tax bill — and experience a tax increase.
Each legislator who spoke Tuesday during a news conference to unveil the legislation said property taxes is the one subject that constituents repeatedly complain about.
Rep. Tina Davis, D-141, who has been a realtor for 22 years, said eliminating the property tax is the biggest thing the state can do to help senior citizens remain in their homes.
“I’m just so proud to be a co-sponsor of this bill. I know it’s going to take a while ... but I’m committed to Rep. Cox. I’ve already offered to have a hearing in my district and you’ll see a lot of people coming out for that,” Davis said.
Soon after lawmakers unveiled the legislation, representatives from an advocacy group were delivering half apple and cherry pies to their offices to show how special attention to cutting business taxes has added to the financial pinch for schools, health care services and local communities.
“We have been cutting business taxes for 12 years and we are not farther ahead than we were when we started, and that’s a problem,” said Pennsylvania Budget and Policy Center Executive Director Sharon Ward.
“Refusing to adequately fund essential services in order to protect these big corporations is the ultimate false choice and that’s why we’re all here to say enough is enough. We’ve had it,” said Mike Brunelle, executive director of Service Employees International Union’s PA State Council.
Lawmakers who want to replace the school property tax with increases in the sales and personal income tax say they believe their plan will work because it’s based on an analysis conducted in 2012 by the state’s Independent Fiscal Office.
According to its October report on state and local tax comparisons, Pennsylvania has the 39th highest sales tax, as a percentage of income, of 2.05 percent while its property tax, at 3.03 percent, was 31st highest in the country. Pennsylvania’s personal income tax rate, at 2.63 percent, is 16th highest.
The legislative proposals already have the support of the Pennsylvania Coalition of Taxpayer Associations, which is a group representing 76 local taxpayer advocacy groups.
“(It) stabilizes school finances with a predictable revenue stream, continues to fund all school districts at their current levels, and does not interfere in any way with local spending decisions,” the association’s David Baldinger said.
Baldinger said another reason he likes the proposal is because it would limit school budget increases to the rate of inflation.
While it is a bit of deja vu in Harrisburg, Sen. Argall said he hopes a penny is all it takes to finally enact school property tax reform.
“Hopefully, this is the year we put the stake through the heart of the beast,” Argall said.