Wolf’s Unfair Tax Shift

School districts that receive the most in state funding today would also be the biggest winners under Gov. Tom Wolf’s proposal for property tax rebates. Gov. Wolf’s proposed tax shift fails to deliver universal property tax relief, creates winners and losers (mostly losers) among school districts, offers no guarantee of lower property taxes, and creates an unfair system of doling out state money unrelated to tax burdens.   

Our most recent policy brief takes a look at Gov. Wolf’s proposed property tax shift, part of his 2015-16 budget proposal. As we’ve noted, Wolf’s plan would not provide property tax relief for at least one year after state taxes go up, and only 30 cents out of every dollar in new state taxes would go towards property tax relief in the first two years.

Moreover, Wolf’s plan results in a net tax increase of around $1,400 per family of four, both next year and again in 2016-17 after the plan is fully implemented.

A separate analysis from the House Republican Appropriations Committee finds that 80 percent of school districts would be “losers” under this shift. That is, residents would pay more in sales and income tax increases than the district would get for property tax rebates. This analysis doesn’t even consider that tax rebates would occur one year after tax increase, or the other state taxes Gov. Wolf is proposing to raise.

Our new analysis finds:

  • Across the state, the disparity in property tax relief under Gov. Wolf’s proposal varies widely. Based on current homestead exemptions, school districts would receive between $301 and $5,209 per homeowner.
  • The top 20 districts would get an average allocation of $2,860 per homeowner. The bottom 20 would get an average of $477 per homeowner.
  • The redistribution favors districts that currently receive most of their funding from state taxes, while districts getting the least relief currently raise more than 60 percent of their funding from local taxes.
  • Philadelphia would receive some property tax relief, along with reductions in the city’s wage tax, sales tax and elimination of the local cigarette tax—essentially exempting Philadelphia residents from the statewide tax increase.

You can get the full analysis here.

For an interactive, sortable list of the proposed tax rebates, and current state and local revenue shares, click here.