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Blue Pennsylvania: Penny Wise and Pound Foolish

When budget time rolls around, there is always a lot of chatter about the proverbial poor widow, who owns her own home, but receives little or no income to pay off the exorbitant real estate taxes, utilities, and other expenses connected with property ownership.  Over the years, Republicans have offered a number of so-called remedies, such as HB 76 and HB 1189 in 2013, but dissention among their own ranks doomed both of these attempts.

 

In 2017, Republicans were finally successful in sending a proposal for a constitutional amendment to the electorate to allow local taxing authorities (e.g., counties, municipalities, and school districts) to exempt homeowners from paying taxes on their homes.  The question passed - 54-46%.  After all, who wants to pay real estate taxes?  The only problem was - it didn’t work.  There is not a single local government in the state that we know of that has taken advantage of this allowance.  In the meantime, taxes on properties - homes included - have only escalated, as was the case with the 3% increase in the Bethlehem Area School District earlier this week, while the Indiana Area School District will probably raise taxes by 6.8%, according to a meeting conducted by the board’s Audit & Finance Committee this past Wednesday.

 

Now the Republicans have a new gimmick.  They are not only going to give a break to that widow, but they are going to cut the taxes of income earning families as well.  Their proposal is to cut income taxes from 3.07% to 2.8% while eliminating the sales tax on electricity usage in the state.  And they are going to do all of these things by denying Governor Shapiro the opportunity to implement his plan to distribute $5.1 billion to school districts throughout the state over the next seven years.

 

As far as the income tax reduction is concerned, taking such a reckless measure will only exacerbate the anticipated structural deficit created by the severe reduction in corporate taxes that was discussed in a previous Blue Pennsylvania email.

 

But let’s look at some of those homeowner numbers real quick.  The tax on the average amount of electricity consumed in a year by a household comes to about $106.93. 

 

The median value of a home in Pennsylvania is $239,958.  The overall tax rate considered in the governor’s budget based upon income and property value is 1.55%, making the average tax paid for one’s home in the state to be about $3,719.35.  But about a third of the school districts in the state have tax rates greater than 1.55%.  The governor’s proposal would give those districts enough money to allow school taxes to hover at around 1.55%.  A homeowner in a district with a 1.8% tax rate who pays about $4319.24 in taxes would therefore see their property taxes reduced by about $600 under the governor’s plan. 

 

So, what would you prefer?  To have your electric bill reduced by $107, or your property tax bill reduced by $600? 

There are some liberties taken with this analysis; but in general, it holds.  Taxpayers would derive a greater good from the governor’s budget, while realizing an improvement in student performance; whereas the Republicans’ plan provides negligible relief to the homeowner while reducing essential services that citizens expect from their government.

We are now in a very unique position to offer succor to taxpayers while providing a better life to all Pennsylvanians, and here is what you can you can do to make that happen:

Join Our Monday Zoom to Support the Governor’s Budget, and Help Democrats

Postcard writers, letter writers, and voter registration volunteers.  We will be holding a Zoom meeting to prepare for a new project that will address both the June budget and the November election.  The meeting will be this Monday, May 20, at 7 pm.  Please RSVP (i.e., respond to this email) to express your interest in attending; or, if you can’t make the meeting, your interest in the project.

 

Write a Letter to Oppose the Republican Plan

The Pennsylvania Policy Center has a letter that you can write to your state senator and representative to oppose the Republican tax plan.  You can access the link here.

 

Blue Pennsylvania Interest Survey

There are a number of ways that you can help this year.  Please consider filling out this survey, which you can find here.

 

Support House Bill 2063

And after you complete the survey, please consider taking the following action, which would place some important restrictions on Pennsylvania’s educational tax credit programs – which provide school vouchers without calling them “school vouchers”. 

 

According to the state's Independent Fiscal Office, Pennsylvania has one of the most problematic educational tax credit programs in the nation.  HB 2063 addresses many of the problems cited in the IFO report.  Please consider sending a letter to your state rep in support of this bill.  You can do so here.

 

Thanks,

Coleman


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