Eliminating school property tax comes with risky formula
For most people who own real estate in the region, the school property tax is the largest single bill they pay every year.
So it is no surprise that elimination of that tax often comes up in state Legislature discussions, and there are several property tax-related bills in the House and Senate right now.
But eliminating the school property tax is not the no-brainer solution it appears to be on the surface.
Speaking at a Pennsylvania Economy League luncheon a week ago, Matthew Knittel, director of the commonwealth’s Independent Fiscal Office, a nonpartisan group, put the plusses and minuses in perspective.
Most of the proposals that call for it advocate replacing it with a combination of sales and income tax increases.
And elimination of the property tax can’t create less revenue for Pennsylvania state government, especially not when the state ledger sheet shows a massive shortfall and mounting public pension fiscal woes.
No one is really certain how much sales and income taxes would have to be increased to compensate for the loss of property tax revenue and the amount would vary greatly from school district to school district.
In a perfect world, elimination would help the lot of retirees on fixed incomes – a growing population – and encourage young people to buy a house because they would not have the school property tax staring them in the face each year.
But there’s no guarantee that landlords, given the property tax break, would pass the savings along to renters because rental housing competition varies wildly among Pennsylvania’s school districts.
And given the track record of school districts throughout the state, what happens as expenses grow in coming years and budgets have to be balanced without a property tax?
Elimination of the school property tax is naturally attractive on the surface.
But it will only make sense when there are clear numbers that show it can be done without causing irreparable economic harm to some Pennsylvanians. And numbers such as those numbers have not surfaced yet.