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Pennsylvania Property Taxes, Part 3: Making Tax Relief Complicated

2 min readBy: Alicia Hansen

Pennsylvania 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. relief remains elusive, buried under mountains of red tape. Legislators continue working on their plan to fund education through slot machine revenue while lowering property taxes. In the process, they are unnecessarily complicating Pennsylvania’s 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. system.

Act 72, the Homeowner Tax Relief Act, which was signed into law last July, legalized up to 61,000 slot machines at 14 venues, taxed at 34%. Implementing Act 72 is proving difficult due to setbacks ranging from school districts’ refusal to participate to a state Supreme Court challenge. Now there is yet another holdup: the Gaming Control Board has announced that the issuance of casino/slot parlor licenses will be delayed until next spring at the earliest.

As we’ve written before (here and here), Act 72 is complicated and is consuming enormous amounts of time, energy and money. It violates one of the most basic principles of sound tax policy: simplicity. Taxes should be simple for taxpayers to understand, and also for the state to collect. But the most recent slot machine setbacks show that Act 72 is anything but simple. From International Gaming and Wagering Business:

Democratic lawmakers demanded provisions in the original bill … that the slots be distributed through an in-state supplier. Now, a Democrat representative … wants suppliers to work in regions of the state—essentially meaning slot manufacturers would have to set up operations in Pennsylvania.

Other … delays include a lawsuit by the state’s police union calling for state troopers to oversee in-depth background checks on casino executives, which the board is currently handling through private firms; only about half (60) of the employees needed to run the state Gaming Control Board have been hired, and there’s ongoing debate over who the agency should hire as its head lawyer; and the Supreme Court has struck down a portion of the state’s law that took zoning authority away from municipalities and put it under the direction of the board.

Are the trouble and expense really worth it? Perhaps the property tax/education funding issue should be handled the old-fashioned way: through simple increases or decreases in tax rates or spending. But legislators seem determined to take the roundabout way.