Plan for Pennsylvania's Future

[ChamberedRound]

Hey all,

I usually don't post political stuff that's non-firearms related, but this issue is important to me and something I think everyone should know about. I'm writing this in response to a newsletter I just received from Rep. Samuel Rohrer:

http://gw_pahouseit_district128.psin...6508.823&gen=1

As I've written before, PA Rep. Samuel Rohrer (R, 128th District) is a strong supporter of the 2nd Amendment and the RKBA. However, one of his other major initiatives is property tax reform. Last year he and some colleagues as part of the Commonwealth Caucus introduced legislation called the Plan for Pennsylvania's future, a property tax reform bill. It didn't get any traction last year, but they are gearing up to re-introduce this bill in this session, especially in light of the overwhelming rejection of Act 1 statewide. This bill essentially does the following:

- ELIMINATES (not reduce, ELIMINATES) the property assessment based school tax.
- Reduces the state's Sales Tax to 5% from the current 6%.
- Broadens the base of the sales tax to include just about everything (there are exceptions, see links below for information).
- Amends existing law to prohibit a property assessed based tax from being re-introduced.

So although we'd pay sales tax on more things, the overall tax rate would go down and school taxes based on property assessments, which is the largest part of a PA resident's overall tax burden, would be GONE. There are other benefits as well:

- A sales tax is progressive; it makes more money every year without raising the tax rate, assuming economic growth exceeds inflation.
- A portion of the money freed up by not paying school taxes will likely be spent by citizens, which means more money injected into the state's economy.
- Business would also be included, which means companies would see PA as a more attractive call home, as they also would not pay school taxes. However, they would inject money into the state's "school fund" through their purchases, which tend to be significant for business.
- Homeowners will be more likely to spend money to repair and improve their homes, because they will not re-assessed for more taxes when that addition is complete or that new pool is installed.
- A sales tax is fair and equitable; everyone pays the same 5%.
- YOU decide when to pay the tax. If you can't afford to pay the taxes on a proposed purchase, then don't buy it. Yes, you may have to do without something, but at least you won't have a Sheriff's Deputy evicting you from your home because you couldn't pay when THEY decided you had to.

I know this is a controversial topic, and I'm sure not everyone will agree with this legislation. But I would ask everyone to as least read the materials provided on the Commonwealth Caucus' Website and make an informed decision on the issue. At worst, you spent a hour so reviewing something you don't agree with, and at best, you've learned about a grassroots tax reform proposal which is getting more traction.

If you support this idea, make sure to write your PA Representatives and Senators and tell them to support this plan.

Here's the links:
Commonwealth Caucus Homepage:
http://www.commonwealthcaucus.org/about.htm

Documentation on the Plan for Pennsylvania's Future:
http://www.commonwealthcaucus.org/plan.htm

See p.18 of the following document for exemptions:
http://www.commonwealthcaucus.org/do...an/booklet.pdf

Enjoy...

[God's Country]

I have supported this notion for years. I will be surprised if it gets traction.

[Brick]

As stated, switching to a Sales Tax base instead of property tax will result in an increase in Federal Income Tax, for those who itemize, because the property tax deduction is lost and the Feds don't recognize deduction for sales taxes any more. So if I have to pay taxes anyhow, I'd rather pay it to local government and minimize what I pay the Feds.

[D-FENS]

As stated, switching to a Sales Tax base instead of property tax will result in an increase in Federal Income Tax, for those who itemize, because the property tax deduction is lost and the Feds don't recognize deduction for sales taxes any more. So if I have to pay taxes anyhow, I'd rather pay it to local government and minimize what I pay the Feds.

I thought you could only deduct interest payments on your mortgage and not property tax payments. I'm not a homeowner or tax specialist. Can anyone shed light?


Thanks for the heads-up CR. I've been wanting to buy a house but taxes in Allegheny County are obscene and that's been my impediment.

[RandomTask]

I'm all for it.
Property tax is the greatest barrier to personal liberty, and I feel it's unconstitutional.
In essence, you're a tennant on your own land and if you don't pay your periodic "lease" to the gummint, they will seize that land and all that's on it.
Property tax says, "You may not be self sufficient on your own land. Instead you must have a job that pays money to pay your tribute. You MUST earn an income at least in the amount to cover the tax or we'll releive you of your property in favor of someone who can afford the "rent"."
For some people, that can be thousands of dollars per month. This can hit people by surprise if they own a family farm (hundreds of acres) that has been passed through generations, but urban sprawl has suddenly made the land more valueable and put more pressure on the local school district (more residents with kids move in and use the school, which means proportionally less "non-customers" are paying the tax than before).
It especially pisses me off when the old widow on social security, who with her departed husband payed off the house decades ago, loses her property because the tax rates outpace inflation as she struggles with her fixed income. She then has to sell the house because the tax is more than her mortgage ever was.

[knight0334]

After reading the info on that proposal, I'm all for it.. It closely matches other states' tax structure, and it works for them.

One thing we could do to eliminate additional expenses is get rid of the 4 tier government structure too. The 4 tier structure would only exist in incorporated towns, boroughs and cities. 3 tier would exist in rural areas. what I mean is consolidate the townships under authority of the county. we wouldn't have to pay for township supervisors and clerical staff. (I'm sure I'll tick someone off with that proposal)

[God's Country]

I thought you could only deduct interest payments on your mortgage and not property tax payments. I'm not a homeowner or tax specialist. Can anyone shed light?

You can deduct your school taxes when you choose to itemize.
It gets fuzzy in this case because you would have to know about how much additional money you may be spending with the whole sales tax shift.

With that said. If you pay 5k in school taxes that 5k would come off your taxable income. But you only recoup the percentage which reflects your tax bracket.
So if your 30% say, and you deduct that 5K you'll save 30% of the 5K.
Whereas if you didn't have to pay that money obviously that's 5k more in your pocket, less what the tax shift would cost. Of course if you are teetering on the 30% tax bracket and the deduction knocks you down to a lower one you'll save
more.

I have no idea what school taxes are in the urban areas, but I'm guessing they are very high. The standard deduction is up to 5,150 these days so you need to exceed that amount to itemize. In my experience most of the deductible amount comes from the interest on your mortgage payment.

As far as the tax shift thing goes. I may be missing something, but that is how I
currently see it.

Edit: Also if you do not deduct your school taxes your taxable income would increase based on your tax bracket.

[Brick]

I thought you could only deduct interest payments on your mortgage and not property tax payments. I'm not a homeowner or tax specialist. Can anyone shed light?

I'm not a tax lawyer, but I learned this the hard way.

You may deduct any property tax, in our case, school and state and local, as long as the tax is based on the assessed value of the property (the 2% tax that PA charges buyer and seller of a property is not deductible). The trick is that all of your (Federal) deductions have to come out to more than the Fed's standard deduction.

[ChamberedRound]

As stated, switching to a Sales Tax base instead of property tax will result in an increase in Federal Income Tax, for those who itemize, because the property tax deduction is lost and the Feds don't recognize deduction for sales taxes any more. So if I have to pay taxes anyhow, I'd rather pay it to local government and minimize what I pay the Feds.

A fair point, but only a percentage of the money you would save in PA would go to the Feds as Federal Income Tax, and the rest YOU can decide what to do with it. If you want it to go to the PA govt, donate it. If you want it to go to PA business, spend it. If you want to save it, put it in an account or investment. The whole point is that replacing a property-based tax with a sales tax allows YOU to decide what you want to do with YOUR money.

[LorDiego01]

That 5% tax sounds a lot like the "Fair Tax". Which on my mind, is a very, very bad idea.

It'll simply create a black market for second hand, "tax free" stuff.