Looking to implement 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. cuts across the board throughout the state, lawmakers in Pennsylvania are seeking to close many of the loopholes, deductions, and special exemptions that shrink the base and require high rates on all 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. From Phillyburbs:
The term itself – “tax expenditureTax expenditures are a departure from the “normal” tax code that lower the tax burden of individuals or businesses, through an exemption, deduction, credit, or preferential rate. Expenditures can result in significant revenue losses to the government and include provisions such as the earned income tax credit, child tax credit, deduction for employer health-care contributions, and tax-advantaged savings plans. s” – suggests something that needs reining in. And some legislators believe that’s exactly what is needed. In fact, it’s a catchall phrase the state government uses to describe the tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. s, deductions, exemptions and exclusions that allow Pennsylvania taxpayers to legally sidestep at least part of what they otherwise would have to pony up to the commonwealth. Another name is “loopholes,” and there are so many that listing them consumed 74 pages in the governor’s last budget book. They carry a big price tag – roughly $26 billion this year, more than the state’s General Fund budget – that translates into real savings for many residents and businesses.
…(T)he idea of repealing tax breaks to free up additional money, to provide at least deeper reductions in property taxes, is alive and well. And there are plenty to choose from. (Full Story)
Legislators in Pennsylvania are beginning to realize the fundamental reality that every time they pass special deductions targeted at special interests, they must raise taxes on the rest of the 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. , and that the best tax policy prescription is few deductions and a broad base with low rates.
It’s unfortunate that when a proposal like this to eliminate deductions and produce lower rates at the federal level has been brought forth (ie, Tax Reform Panel), it is considered by most members of Congress to be dead on arrival.
Tax Foundation Chief Economist Patrick Fleenor recently estimated that the federal government could finance its current revenue level with a 9 percent flat income tax if it merely expanded the base by eliminating all deductions and exemptions.Share