Better Solutions Exist for Property Tax Issues, PBPC Analyst Testifies
July 26, 2012
PBPC Research Director Michael Wood testified before the Senate Finance Committee today on Senate Bill 1400, which would eliminate school property taxes in Pennsylvania. Read his testimony below:
SB 1400 attempts to “solve” the property tax problem in Pennsylvania by eliminating school property taxes, typically the largest portion of a taxpayer’s property tax bill. While property taxes are a problem for people in specific situations and over-reliance on a single source of tax income is a problem for public institutions, eliminating school property taxes in Pennsylvania — and the strict limits placed on schools — in this bill would have dire unintended consequences for our state, our residents, and our children.
Rather than taking the untested measures encompassed in SB 1400 and the uncertainty they would foster, we think the General Assembly could consider a number of more targeted and proven policy prescriptions that would better address property tax issues in Pennsylvania.
Pennsylvania has over 5 million owner-occupied residences, according to the U.S. Census.
Like those losing homes to foreclosure, losing one’s home due to delinquent tax payments is a troubling problem — and the state has a valid role to play in preventing this from happening to homeowners. However, dismantling the school funding system as SB 1400 suggests for a problem that doesn’t affect 99.8% of the homeowners would effectively be “throwing the baby out with the bathwater.” There are better, more targeted ways to address this specific issue. Proponents argue that 10,000 Pennsylvanians lose their homes each year, which equates to less than 0.2% of the total homes in the state.
Other states that have tried similar measures, and the results are not promising for success in Pennsylvania.
SB 1400 includes a number of features that could be part of an effective solution, but not as it is currently written.
Increased state funding for schools and a long-term commitment to maintaining that funding must be part of any solution — however, how those funds are raised matters.
As you consider this bill, and other proposals to reform property taxes, a number of things should be kept in perspective.