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In this Email Update:
My work continues with Senator Mike Folmer to eliminate school property taxes
Last week, I joined my friend and colleague, Senator Mike Folmer (R-Lebanon), to provide this update on our bipartisan fight to eliminate school property taxes.
Several advocates for the elimination of school property taxes have asked us where efforts to rid taxpayers of this hated tax currently stand. A bipartisan coalition of lawmakers succeeded in bringing the provisions of Senate Bill 76 to eliminate these onerous taxes to a vote in November after working to ensure the plan, also known as the Property Tax Independence Act, did not suffer the same fate as its counterpart, House Bill 76, last session.
While supporters were understandably disappointed by the 24 – 24 vote to insert the provisions of SB 76 into another bill, the Senate debate shows the progress we’ve made as a cohesive coalition over the last several years.
Making SB 76 work came after months of painstaking efforts. Changes were drafted through an arduous process of meeting with opponents, carefully going through their concerns, studying two analyses from the Independent Fiscal Office issued in 2012 and 2013, respectively, and dissecting 13 pages of comments from the Pennsylvania Department of Revenue.
The recent Senate debate focused on the public policy of such a shift. More importantly, the Senate deliberations have opened a dialogue with the governor on working together to reach this much needed and long overdue goal.
We removed all of the excuses for not supporting total elimination of school property taxes. The numbers and the plan both work. It’s possible to eliminate school property taxes.
Total elimination of school property taxes requires about $13 billion in replacement revenues and there are four other taxes that can be used to eliminate school property taxes: Personal Income Tax (PIT), Earned Income Tax (EIT), Sales & Use Tax, and/or another tax. SB 76 relies upon three of these four to eliminate school property taxes.
As amended, SB 76 proposes a combination of changes in sales and personal income taxes. The Sales Tax would be broadened and expanded to 7% and the PIT would be increased from 3.07% to 4.95%. SB 76 would also allow local school districts to impose an EIT or PIT upon voter approval.
Shifting from one tax to another results in different impacts on taxpayers. To calculate how the proposed SB 76 changes would impact you, compare what you now pay in school property taxes to what you would need to spend under an expanded Sales Tax and a higher PIT. Increasing the Sales Tax to 7% and expanding its base would mean you would need to spend $14,285.71 in newly taxable items for each $1,000 you now pay in school property taxes before you would be a net “loser”.
Many attempts have been made to reduce property taxes. In 1965, Act 511 was passed to ease the burdens of property taxes through a myriad of other taxes, which included taxes on: amusements, mercantile and gross receipts, taxes on businesses, Realty Transfer Tax, per capita taxes, personal property taxes, occupation and occupation privilege taxes, and local Earned Income Taxes. These taxes proved to be equally unpopular and were changed or repealed over the years.
In 1987, then Governor Casey and the General Assembly developed and sent voters a bipartisan plan that included expanded wage taxes, optional personal property and sales taxes for counties, use of the Realty Transfer Tax by municipalities, municipal service fees, property tax millage restrictions, and payments for tax exempt properties. That plan was overwhelmingly rejected by voters statewide four to one.
During the Rendell Administration, enactment of gaming and a subsequent expansion of gambling was promised to reduce property taxes by a minimum of 20%. It didn’t and it hasn’t.
The Pennsylvania Institute of Certified Public Accountants has a brochure on “Guiding Principles of Good Tax Policy” and we believe SB 76 meets each of these ten principles: equity and fairness, certainty, convenience of payment, economy of collection, simplicity, neutrality, economic growth and efficiency, transparency and visibility, minimum tax gap, and appropriate government revenues.
We remain committed to eliminating school property taxes because as one advocate said and we wholeheartedly agree, “No tax should have the power to leave you homeless.”
You can also access the column on my website.
Temple University’s Commonwealth: A Journal of Pennsylvania Politics and Policy looks at both sides of school property tax debate
Earlier this year, my staff and I were invited to provide reasons why Pennsylvania should abolish school property taxes once and for all. Our peer-reviewed paper was recently published along with a study by William A. Fischel, a Dartmouth College economist, which defended school property taxes – a perspective not frequently heard in Berks and Schuylkill Counties.
You can read both published papers here.
Schuylkill County residents recognized in Pennsylvania Senate
Pastor Susan Daniels of my church, the First United Methodist Church of Tamaqua, served as the Senate’s Chaplain on Thursday. She opened Senate session in prayer.
During session, I also had the opportunity to introduce her and my intern in the Harrisburg office, Zack Adams of Frackville. Zack is a junior at Penn State and interning through the summer.
Sen. Argall with Zack Adams, left, and Pastor Susan Daniels, right, prior to Senate Session on Thursday, June 23.
Five bills receive final legislative approval
Five bills received final legislative approval last week and were sent to the governor for his signature and enactment into law.
House Bill 602 increases the active duty pay for National Guard personnel from $75 to $100 per day. The National Guard base pay was last increased in 1996, from $45 to the current rate of $75 per day.
Senate Bill 936 provides for a one-time fee of $50 to cover the employer’s costs in setting up the wage garnishment to comply with the enforcement of a child support order.
Senate Bill 1270 amends the Real Estate Appraisers Certification Act to bring Pennsylvania into compliance with updated Federal appraiser standards.
House Bill 1325 gives second class townships the authority to implement storm water management ordinances and to assess a fee to fund the planning, management, implementation, construction and maintenance of storm water facilities.
House Bill 1766 allows future life insurance policy reserves to be based on Principle-Based Reserving, a methodology that is more advanced and better reflects the risks of new innovative insurance policies.
Senate sends five bills to House of Representatives
The Senate approved five bills last week and sent them to the House of Representatives for consideration.
House Bill 342 adds “school director” to the list of various elective offices in the Election Code and sets a requirement that candidates for school director obtain 10 signatures in order to appear on a primary ballot. The bill returns to the House for concurrence on Senate amendments.
Senate Bill 876 amends the Workers’ Compensation Act to allow the Department of Labor & Industry to verify that out-of-state employers have secured required workers’ compensation insurance or are self-insured under the workers’ compensation statutes in other states.
Senate Bill 1166 gives the Pennsylvania Game Commission the authority to establish the fees that it charges for licenses.
Senate Bill 1168 gives the Pennsylvania Fish and Boat Commission the authority to establish the fees that it charges for licenses.
Senate Bill 1233 adds “Special Emergency Response Team” to the definition of emergency service responders and emergency vehicles in state law.
The Senate is scheduled to convene today (Monday, June 27) at 1 p.m. You can watch session live and view the voting calendar on my website.