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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session


Posted: January 30, 2015 05:08 PM
From: Senator David G. Argall and Sen. Mike Folmer, Sen. Judith L. Schwank, Sen. John T. Yudichak, Sen. Mario M. Scavello, Sen. Scott Wagner, Sen. Lisa M. Boscola, Sen. Andrew E. Dinniman
To: All Senate members
Subject: Property Tax Independence Act
Our constituents have told us loud and clear – the school property tax is the most-hated and egregious tax. While the school property tax may have made sense when it was first enacted in the 1830s, we believe it is time to shift to a fairer way to fund our public schools.

On behalf of 80+ grassroots taxpayer advocacy groups across the Commonwealth, we will re-introduce the bipartisan Property Tax Independence Act. This legislation will be similar to Senate Bill 76 of 2013. Major changes will include the technical amendment that the Senate Finance Committee approved on September 16, 2014, as well as updating several dates throughout the legislation.

The legislation would eliminate school property taxes and shift to an increased Sales and Use Tax and Personal Income Tax.

Specifically, the state’s Sales and Use Tax (SUT) would be broadened to include more goods and services and increased from 6 to 7 percent. The state’s Personal Income Tax (PIT) would be increased from the current 3.07 percent to 4.34 percent. The Hotel Occupancy Tax would also increase from 6 to 7 percent. Existing revenue dedicated to property tax relief from casinos would be utilized to eliminate school property taxes. The Property Tax/Rent Rebate program would continue to provide assistance for county and municipal property tax relief for those who qualify.

The new revenue sources would replace dollar-for-dollar the revenues lost by the school property tax elimination.

School districts would continue to collect the property tax until June 30, 2016. Each year thereafter, districts would receive their reimbursement from the State Treasury on a quarterly basis with a cost of living adjustment (the lesser of the increase to the Statewide Average Weekly Wage or average percentage increase in the PIT, SUT and hotel occupancy tax).

A portion of the school property tax would remain only to pay off that debt service which is on the books as of December 31, 2015.

Under this proposal, any school district seeking to spend above the allotment from the state would have to ask the voters for their support in a referendum. School districts may locally increase the PIT or Earned Income Tax if approved by the voters in that district. We believe this is the greatest form of local control – allowing the voters to decide the merits of spending increases.

As one grassroots advocate stated at a public hearing last session: No tax shall have the power to leave you homeless. We agree!

Introduced as SB76