New Reports on property tax elimination in PA

Posted on January 5, 2018

New raft of data sets stage for debate over school property tax elimination in Pa.

In the past month and a half, Harrisburg’s nonpartisan Independent Fiscal Office has released four research briefs or special reports.

Three of those four have been about property taxes, and they may soon factor into a major policy debate.

In November, Pennsylvania voters approved a constitutional amendment that could make it easier for the state to eliminate property taxes on individual homeowners. But that ballot measure in and of itself does nothing to change state law. It merely paves the way for state lawmakers to pass new legislation that could achieve that end.

These new reports — heavy with charts and computations — will likely inform arguments made for and against property tax abolition.

The most recent report took a county-by-county look at the proportion of property tax revenue generated by homesteads. In 22 counties, the majority of this revenue comes from commercial properties.

This is true of Philadelphia, for instance, where only 36 percent of property tax revenue comes from homesteads. At the other end of the spectrum there’s Perry County, pop. 48,500, which traces the Susquehanna River Northwest of Harrisburg. There, homeowners provide two-thirds of the property tax revenue.

The constitutional amendment approved in November allows state lawmakers to eliminate property taxes on homeowners while continuing to tax commercial properties. This could help appease critics of the plan who fear abolition could amount to a corporate handout.

The previous proposal sought to phase out the $12.6 billion currently raised for schools through local commercial and residential property taxes, and replace revenue at existing rates by hiking state sales and income taxes. Now, lawmakers could theoretically target just the $7.7 billion collected from owner-occupied properties.

The latest IFO report shows where that replacement revenue would go in a scenario where only homeowners were exempted. Places like Perry County would get proportionally more of the fill-in dollars. Greene County — on Pennsylvania’s Southwest border — would get much less, since only 23 percent of the county’s property taxes come from the pockets of homeowners.


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