Pennsylvania Debating Change to Property Tax Issue Again

There is a debate in Pennsylvania regarding the issue of getting rid of real estate taxes and implementing other methods to pay for the state's public schools. This is not the first time the issue of real estate tax reform came before the state Senate and House. According to the Daily Times, House Bill 1776, which is similar to the current Senate Bill SB1400, died after it was introduced earlier this year.

Should the tax reform go through, real estate taxes would be eradicated and sale tax and income tax would be increased. One senator has been trying for years to change the way Pennsylvania counties fund public schools.

The problem with removing the real estate taxes is two-fold in that it would benefit some and not benefit others. Inevitably, no matter which way the vote goes, some people are going to be upset. The state would need to collect sales tax on $14,000 worth of purchases for every $1,000 in real estate taxes collected just to break even, according to a senator.

If a homeowner's taxes are low, that homeowner will end up paying more in taxes if the plan passes the Senate and the House. Those paying high property taxes will most likely pay lower taxes, overall. Another senator stated that some people let their property fall into disrepair just so their taxes decrease. This also brings down the value of other homes in the neighborhood, and looks quite unsightly as well. Some argue that the current system encourages homeowners to ignore the upkeep and maintenance on their property.

Business groups think that leaving the property tax behind and increasing the sales tax would hurt businesses. Property tax reform is at the top of the list every year in at least one county because politicians do not want to tell some of their constituents that they may have to pay more in taxes.

Source: Daily Times, "Property tax reform long overdue in Pa.," August 4, 2012.

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