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Pennsylvania Legislators Consider Property Tax Reform Top Priority

2 min readBy: Alicia Hansen

Property taxes are not popular with taxpayers in any state, but as we have written before (here, here, and here), they have recently been an especially contentious issue in Pennsylvania.

Issues PA, an initiative of the Pennsylvania Economy League, recently conducted two surveys on the topic, one of legislators and one of other residents. The results are telling: both groups consider property taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es an excessive burden, although they don’t all agree on the remedy.

From the IssuesPA/Pew Legislators Survey:

The IssuesPA/Pew poll gave state legislators the opportunity to name any issues or problems as the top priority for action by the legislature this year. Two items dominate their agenda: close to half (46%) of legislators call for doing something toaddress property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es; and four in 10 (41%) cite health care as a top priority.These two top priorities rate well above the next three, which are government orlegislative reform (21%), dealing with the budget/state spending levels (15%), andinfrastructure improvement (14%).The priorities of legislators vary by chamber, party, and region.

• State senators tend to put health care before property tax reform (59% vs.25%), while state representatives tend to do the opposite (37% health care vs. 50% property taxes.

• Democratic legislators are more likely than their Republican colleagues to say health care is the number one priority (51% vs. 32%).

From a 2006 IssuesPA/Pew poll of Pennsylvania residents:

Respondents were divided. Asked to choose one of four tax increases to make cuts in property taxes possible, two options were most popular. Among those interviewed, 24% selected increasing the overall state sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. rate and 23% selected expanding the state sales tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. to include items such as clothing and food. But on the flip side – which tax increase is least acceptable – increasing the state sales tax rate emerged as the more politically viable alternative. Expanding the state sales tax base also rated as one of the two least acceptable alternatives (chosen by 27%), along with increasing the local wage tax (25%).

Residents found no shortage of reasons to dislike property taxes:

Source: Pennsylvania Economy League

According to the Tax Foundation Special Report Property Tax Collections Surged with Housing Boom, in FY 2004, Pennsylvania ranked 25th in property tax collections as a percentage of income (3.12%).