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I have been reading the various candidates websites on the subject of property tax reform. The best one I have found is Jim Spinola's, candidate in the 118th District.
My plan is simple:
Lower sales taxes to 5%, expand taxable items and give rebates to senior citizens and low-income families.
Here’s how it works:
Educating Pennsylvania's children costs about $18 billion per year. The state pays $8 billion and local property taxes make up the other $10 billion. Census data indicates the median household income in PA is about $40,000. Therefore, the lower 25 percentile of residents would be in the $20,000 range. Since not all income is spent and we are already paying sales tax on some items, I would use $10,000 as a spendable income figure multiplied by the new lower 5% sales tax, equaling $500. I would propose this flat $500 as a rebate to senior citizens and low-income families to compensate for any increased sales tax they may incur on necessities like food and clothing. This $500 multiplied by the Census figures for that demographic equals about $600 million. Other current legislators have already performed studies showing a drop to a 4% sales tax generates more than enough revenue to fund schooling. My proposal of 5% would not only eliminate property taxes but would allow enough left over to fund the $600 million rebate.
Addressing the concerns of some that a rebate is too cumbersome and requires more work, Spinola replied, "Isn't it worth checking off another box or filling out another form to get a $500 rebate PLUS PROPERTY TAX ELIMINATION?"
As far as the gambling money is concerned, Spinola was one of the first school board members to go on record opposing Act 72 stating "It would have hurt many more people than it would have helped." Spinola continued, "Even IF the state received the estimated $1 billion in slots revenue, compared to our $10 billion local educational costs, we would receive only a 10% property tax reduction. The taxpayers deserve more! This reduction would be eaten up in future tax increases. Just look at the East Stroudsburg School District's proposed increase this year alone! In our present tax system, you never truly own your home."Spinola said he would take any gambling revenues generated and add it to the lottery proceeds to expand the PACE prescription drug programs to give senior citizen additional relief.
1 hour ago
3 comments:
I really don't like the idea of expanding taxable items but I wouldn't have a big problem with the reduction of sales tax if it were balanced out with a more progressive tax.
Hi Tom/Austin,
Thanks for your comments. One concern I have over an income-only tax base is that there are thousands of people in NEPA that commute and do not pay income taxes to PA due to the lack of reciprocal agreements with New Jersey and New York. I'm not trying to double-tax commuters; I’m just trying to keep our tax money here in PA.
By lowering sales tax and expanding taxable items, not only residents and commuters, but tourists and other visitors help to fund our Pennsylvania education system.
Look at this example: I have already quoted Census data which indicates the average PA family income is about $40,000. Even if the average family spent every penny of their gross income that would only be $2,000 ($40,000x5% sales tax). I don’t know about you but I’m by no means rich and my property taxes are nearly $4,000 in the Pocono’s! I’ve spoken with a lot of people who would gladly pay $2,000 rather than $4,000 or more.
Of course the numbers will vary depending on your particular situation, but isn’t it worth it to have the peace of mind that you can finally, truly own your own home? As it stands now, you can own a house free and clear but if you don’t pay your property taxes, it can be sold out from under you at a tax sale.
No plan will ever be perfect, which is why the current legislature can’t come to an agreement. My plan tries to be fair to the most people and especially senior citizens and low-income families who will receive a rebate on top of property tax elimination.
And the beauty of it is that it all ties together, economic development will reduce the need to commute and gaming money, instead of being used for a meager tax reduction, can go towards the PACE prescription program making more senior citizens eligible.
Jim
This is a great idea and a FAIR plan. I hope you get elected. People that think sales taxes burden us middle class people are mistaken. Your explanation makes perfect sense and you use numbers and examples to back up why it will work. Every time I have heard someone complain that expanded sales tax is unfair, they never seem to be able to give true numbers to justify why it is unfair.
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