Rumors about a proposed budget continue to swirl in Harrisburg. One such rumor is that the deal would include an increase in the sales tax rate to be used for property tax relief.
One new idea under discussion could provide a cornerstone of the cash Wolf is seeking: diverting the roughly $600 million in slot-machine gambling receipts that school districts currently pass along to homeowners as property tax reductions. That stream of money would shift to the state treasury, while negotiators are discussing an increase in the state sales tax to offset reductions in local school property taxes, another concept that is important to Wolf to improve equity in school funding.
This may be sold as a “dollar-for-dollar tax shift,” but represents anything but. In reality it would be a $600 million tax increase on working families.
That is, if the plan were to increase the sales tax by $2 billion next year, property taxes would only be cut by $1.4 billion—with $600 million directed to new spending.
That’s a backdoor tax increase on working families.