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Editorial: Another uphill climb for tax reform

Once again, state Rep. Frank Ryan deserves credit for tackling the ever-troublesome issue of school property taxes with a refreshingly honest approach.

The Lebanon County Republican once again is introducing legislation to eliminate school property taxes and change the way education is funded in Pennsylvania.

For many years there’s been a movement to stop relying on property taxes to fund schools. People are hit with bills of thousands of dollars each year. It’s especially tough on older people on fixed incomes. In many cases such people don’t have to make mortgage payments anymore, so the tax bill comes in one big lump sum each summer.

Though the idea of eliminating the property tax is broadly popular, especially in these parts, the idea keeps hitting a few snags. First and foremost is coming up with a fair replacement for the revenue involved and ensuring that it is as reliable a source of money as the property tax has been. The other issue is figuring out how to distribute the revenue to school districts if the state is collecting the income and/or sales tax intended to fund education.

To begin with, Ryan acknowledges that the complexity of the current school funding model has made it difficult to change it. And he is urging people to accept the reality that people will still have to pay taxes to fund education regardless of what system is in place.

“Everybody wants to get rid of property taxes as long as the other person is the one who is going to pay the replacement tax,” the Lebanon County Republican said as he introduced House Bill 13. “It is clear that any solution will require sacrifice on the part of all Pennsylvanians.”

It may not be what people want to hear, but it’s the truth. To eliminate local property taxes, the state government would have to come up with $16 billion beyond its current $8 billion-plus contribution. There’s no painless way

Ryan’s bill is similar to legislation he’s introduced before, without success. The legislation aims to replace property tax revenue with sales and income taxes. It would increase the state income tax to 4.92%, with those funds going to the local school district. The state sales tax would go up by 2%, with those funds going to each county to allocate to school districts. The sales tax would be expanded to include clothing and food, with an exemption on the food tax for people on public assistance.

The bill would tax retirement income, not including Social Security income, military pensions and member contributions to retirement plans. Workers’ contributions to a pension plan would be tax deductible.

This is where things get difficult. A tax on retirement income is bound to be unpopular with older people, the very constituency most enthusiastic about eliminating the property tax. Taxing clothing and food is a regressive levy that would hurt vulnerable Pennsylvanians and have a negative effect on the state’s retailers.

Having the state and counties dictate how much money each district gets takes away a key aspect of local control in education. A set income tax is not likely to produce the needed revenue to deal with increasing costs over time. And given the state’s track record in the education funding it already does, we are not confident there will be a fair allocation of resources anymore than there is now. It could make matters worse.

That’s not to say that these ideas aren’t worth discussing. They are. Any solution is going to be painful for someone. But persuading people to accept that requires a steep uphill climb.

We applaud Ryan for emphasizing the reality that if the school property tax is eliminated, replacing the lost revenue will require many Pennsylvanians to make sacrifices. We certainly hope people get the message.

We agree that the property tax has serious downsides, but we also believe that the state must ensure that there’s sufficient money available for strong education in all communities in our commonwealth. We hope Ryan’s ideas spark further discussions on how to address both issues in a way most of us can live with.


Source: Berkshire mont

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