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JULY 6, 2011 | Commentary by NATHAN BENEFIELD
Corbett's First Inning Scorecard
July signals the coming of two breaks in Pennsylvania—Major League Baseball's All-Star break and the end of the state budget season. Having endured his first budget as the commonwealth's chief executive, Gov. Tom Corbett has effectively finished the first inning of a nine-inning baseball game. The question is, how did
JUNE 23, 2011 | Commentary by NATHAN BENEFIELD
Give Voters a Say on School Taxes
Five years ago, state lawmakers passed Act 1 to provide property tax relief and give voters a voice on school tax increases. But since slot machine gambling was introduced in Pennsylvania, school property taxes have grown by almost $700 per homeowner. And yet 98 percent of school districts have avoided voter referendum on tax hikes.&
MAY 2, 2011 | Testimony by NATHAN BENEFIELD
Property Taxpayer Referendum
Testimony of Nathan A. Benefield to the Pennsylvania House Finance Committee
House Bills 1326 and 1383 take an important step giving voters more control over school taxes, by eliminating the referendum loopholes allowed under Act 1. Combined with mandate relief legislation to give school boards more flexibility in spending, these bills will help control the growth in school spending and property taxes.
Recent Blog Posts
DECEMBER 29, 2011
Tax-Exempt Government Property Adds to Harrisburg's Woes
The city of Harrisburg is facing a fiscal crisis primarily brought on by over-spending, accruing too much debt, and getting into areas government has no business—from the incinerator to owning a baseball team to collecting wild west artifacts.
But the Capitol City's woes are aided by the abundance of tax exempt properties. Nearly half of all property value in the city of Harrisburg is owned by government or hospitals and other charities exempt from property taxes. Yet these properties still receive city services, including fire and police protection, and benefit from other core city responsibilities, like road repair and clearing the streets of snow (more or less, as anyone who has driven in Harrisburg after a snowstorm can attest).
According to information from the Mayor's Office and the Dauphin County Assessor detailing Harrisburg tax-exempt government properties, assessing the municipal property tax rate on land (not on improvements, or imposing the school property taxes) would generate around $6 million per year, not an insignificant sum.
The city receives payment in lieu of taxes (PILOTs) to offset some of these costs. According to the Act 47 report, the city gets about $410,000 in PILOTs from 13 organizations. The state budget also includes $500,000 (down significantly from years past) for Capital Fire Protection. But these payments are a far cry from what these entities would pay if their property—even just the land portion—was taxable.
The tax exemption creates a perverse incentive for government and tax exempt organizations to acquire more property than they need. More importantly, these exemptions—combined with over-spending—require higher property taxes on businesses and homeowners.
According to a comparison in the Act 47 plan, property owners in the city of Harrisburg would pay two to three times as much as those in the surrounding suburbs, on average. This high tax burden helps explain why so many are moving out of the city: Harrisburg has lost 45% of its population since it peaked in 1950.
posted by NATHAN BENEFIELD | 11:08 AM | 0 comment
SEPTEMBER 26, 2011
By the Way, Residents Don't Like High Taxes
Dr. Antony Davies, a member of CF's Council of Scholars, and John Pulito add to the growing body of research showing higher state taxes drive out residents. Their new study, "Tax Rates and Migration," finds lowering "high-income" tax thresholds, high overall state income taxes and high property taxes deplete populations.
Often known as "millionaire taxes," states lower personal income tax thresholds to include more than millionaires in the highest bracket. For instance, anyone in Arizona who makes $150,000 or more a year pays the highest level of income tax, in Ohio it is $200,000. The evidence suggests people tend to leave states that lower "high-income" tax thresholds, the same way they leave states that raise tax rates. Pennsylvania does not have tax thresholds because the state levies a flat 3.07 percent personal income tax, but seven states don't even have a state personal income tax.
However, Pennsylvania is a large offender in the property tax category. Property taxes have skyrocketed, increasing by $2.1 billion, or 26 percent, from 2004 to 2008—exceeding both inflation and student enrollment. The authors find property tax rates have a greater effect on out-migration than high-income tax rates.
For example, a one percentage point increase in the property-tax differential between two states has almost three times the effect on migration as does a one percentage point increase in the difference in high-income tax rates.
High levels of local and state taxation combined with heavy business taxation are a major reason Pennsylvania is losing residents to other states.
posted by ELIZABETH STELLE | 03:00 PM | 0 comment
JUNE 9, 2011
PA Property Tax Administration 2nd Worst in Nation
This past May, the commonwealth tied for second worse in the nation in state property tax administration, according to the Council On State Taxation (COST). States were evaluated in three main categories with Pennsylvania earning a D-. Only our neighbor to the north, New York, scored worse.
Read more on the COST evaluation here.
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Table 1. Pennsylvania's COST Evaluation of State Property Tax Administration |
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Category |
Criteria |
Rating |
|
Standardized Procedures |
Standardized Due Dates Reasonable real property tax evaluation cycle |
F |
|
Fair Tax Appeal Procedures |
Appeal deadline must be fair (at least 60 days) Burden of proof to appeal must be reasonable |
C |
|
Residential v. Business Property |
Equal property tax burden Assessment ratios on types of property |
C- |
posted by JONATHAN HUMMA | 06:14 PM | 0 comment
