Time to Extinguish Homeowner School Property Taxes

By Senator Michael A. O'Pake (D-Berks)
Senate Democratic Whip

          Harrisburg, October 22, 2007 -- While I'm encouraged by the new data that shows 7,000 more Berks County senior citizens are getting property tax relief this year than last year (under our dramatically expanded senior citizen Property Tax and Rent Rebate Program) -- a key part of Act 1 of 2006 -- there is no question in my mind that Act 1 did not go nearly far enough in relieving the burden of property taxes.
          Berks County's citizens, young and old, are just plain fed up with property taxes
-- period.  And it was that message, more than any other, that came through loud and clear in the response to a recent newsletter constituent questionnaire in my district.
          Many of you who took the time to respond told me you want a comprehensive solution, one that not only replaces the property tax with a fairer system to pay for our schools but one that also addresses the "cost issue" as well.
          Along these lines, and with the support of more than 75 percent of survey respondents, I am introducing legislation that would totally abolish the most burdensome of the property taxes -- the homeowner school property tax -- via a graduated state income tax on incomes over $100,000.  Under this scenario, the entire statewide $5.3 billion local homeowner school property tax tab could be completely wiped out.  Combined with the use of slots gaming proceeds, we would be able to generate sufficient revenues to abolish the homeowner school property tax via a gradual ½ percent increase in the state income tax rate per every $50,000 in income over $100,000 to a maximum rate of 6.57 percent on income over $400,000.
          Under this plan, over 90 percent of Pennsylvania's citizens would not pay a dime more in state income tax and the vast majority of those who would pay more would still pay less in total taxes once their homeowner school property tax bill was completely eliminated.
          Of the 43 states in the nation that impose a state income tax, Pennsylvania is one of the few that doesn't levy a graduated income tax.  What's more, under my proposal, the maximum 6.57 percent rate for the wealthiest Pennsylvanians would still be below the maximum income tax rates in Pennsylvania's bordering states of New York (6.85%), New Jersey (8.97%) and Ohio (7.185%).
          While my proposal would require a constitutional amendment, I am introducing a companion "emergency" amendment that -- if approved by a two-thirds majority in the General Assembly -- could reach the voters in short order without the customary two-session time frame for consideration of a constitutional change.  The fact is, I believe people being taxed out of their homes constitutes an emergency and I hope my legislative colleagues on both sides of the aisle and in both chambers will agree.  Even if there is a lack of a two-thirds majority for an emergency amendment and two-session approval is required, I'm not aware of any property tax elimination proposal -- regardless of what any of us would like to see -- that can happen overnight.  Just as important is the fact that a constitutional change is needed to prohibit the homeowner school property tax, once it's been eliminated, from ever being levied again.
          Meanwhile, cost savings and cost containment must be a part of any comprehensive solution to this long-festering and difficult issue.  There must be a heightened focus on assuring that our taxpayers are getting the biggest bang for their bucks (no matter how the tax dollars are raised).  Pennsylvania's children deserve a quality education and we must provide the necessary resources to make sure that all of Pennsylvania's children, no matter their zip code, are afforded that opportunity.  But our taxpayers deserve to know that their hard-earned dollars are being spent wisely and that unnecessary, duplicative or wasteful spending is being rooted out and eliminated.  After all, our constitution requires not only a "thorough" system of public education but an "efficient" system as well.  We need to look for new ways to save taxpayer costs, such as a statewide health insurance plan for school employees that could save as much as $500 million and other proposals providing for the bulk purchase of supplies, shared services, and the standardization of school designs to cut down on the costs when a new school building becomes necessary.
          While I remain open to all other viable options, or combinations of options, to finally achieve the goal of property tax elimination, I'm hopeful that my proposed graduated state income tax for homeowner school property tax elimination will receive the serious consideration it deserves.  I look forward to working with my colleagues on both sides of the aisle -- and from both chambers -- in renewing the effort to finally get this job done.
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