WILKES-BARRE — Billed as a House Democratic Policy Committee hearing on “tax fairness,” A gathering of politicians and tax-change proponents had the potential for an ugly shouting match but became a spirited debate on property tax elimination, with both factions agreeing there is a meeting ground to be found in the middle.
Held at King’s College’s Sheehy-Farmer Campus building, Monday’s hearing started with Stephen Herzenberg, executive director of the Keystone Research Center, which has generally supported changes to the public education funding system but opposed Senate Bill 76, proposed legislation that offers to eliminate school property taxes completely by expanding other state taxes.
Herzenberg offered the latest version of the Keystone Center’s “Fair Share Tax Plan,” calling for a 2.8 percent tax on wages and interest and a 6.5 percent on other kinds of income. He argued it would mean nearly 60 percent of taxpayers would see taxes overall go down, almost 26 percent would see no change, and 14.9 percent would see taxes go up, all while raising $2.22 billion in new revenue the first year, with 58.5 percent from the top 1 percent of earners, 83.5 percent from the top 5 percent, and 95.5 percent from the top 20 percent.
The upper income people affected by the change would still be paying lower taxes than they would in neighboring states, he added. “No one rich is going to move to one of our neighbors to save on taxes,” he said.
A second option, he said, would be a severance tax on natural gas, an idea that has failed to gain traction for years. He noted both plans to provide enough money to reduce property taxes — One option: Give tax relief to those spending more than three percent of income on their property tax bill.
But he criticized the property tax elimination through SB 76.
Because it replaces property taxes with regressive increases in revenue from sales and personal income tax, it would hit middle-and lower income taxpayers harder, percentage-wise, than it would hit the wealthy, he said. He also noted the bill, as written, would not change the amount of money each district gets from the state.
“The richest districts would still get more money,” Herzenberg said. SB 76 “is not a way to make the tax system fair, and it’s not a way to make school funding fair.”
Jim Rodkey from the Pennsylvania Property Rights Association and Ron Boltz from the Pennsylvania Liberty Alliance disagreed, taking turns to passionately support SB 76.
Rodkey cited the state Constitution protection of property rights, and said “I believe we have crossed the line of those protections. He cited people losing their homes or families “doubling-up” in a house because of escalating property taxes, and he criticized other proposals as yet another round of partial fixes similar to past efforts that ultimately failed.
“We need a system of education funding that works for everyone,” Rodkey said.
Boltz rattled off statistics he said contradict Herzenberg’s contention that SB76 would hurt lower and middle income residents more than higher income taxpayers, including a personal anecdote about a neighbor making twice as much of he earns with a 48-acre farm who is paying less in school property taxes.
Yet when State Rep. Eddie Day Pashinski, D-Wilkes-Barre, suggested both sides were ultimately working toward the same goal, Rodkey and Boltz agreed. “It really comes down to mathematics,” Pashinski said. “How much money do we need and do we sustain that? But we need to make sure we’re talking about the same numbers.”
Pashinski also argued that SB 76 in prior forms — as well as other property tax elimination bills before it — have failed for years in the state legislature because the flaws are too deep.
“There are pieces missing here,” Pashinski said.
Boltz essentially agreed on that.
If SB76 were passed, he said, “we’re not saying that’s the end of the road. The goal is not to lock any of this in.”
Reach Mark Guydish at 570-991-6112 or on Twitter @TLMarkGuydish