The Senate/House School Property Tax Work Group charged with coming up with a plan to provide residential school property tax relief didn’t just come up with one plan; they came up with 5 plans.
In a December 5 cover letter to Senate and House leadership-- “The time for legislative action is now; especially since there is a lawsuit pending against the Commonwealth regarding school funding and school property taxes, speaking to the severity of this issue and concern.”
“Attached to this letter are summaries of five separate plans to provide significant school district property tax relief to our citizens.
“We request that each of these plans is reviewed by all of the members of each caucus as soon as possible and that the Caucus Whips conduct a thorough count so that we can determine which plan(s) can move forward in the legislative process in 2020.
“As leaders in this Commonwealth, let us work together on this serious issue that has plagued the state for over twenty years. We look forward to working with each of you and in a bi-cameral and bi-partisan manner to effectuate productive property tax reform.”
Plan 1 - $8.62 Billion Reduction
-- 1% personal income tax (PIT) increase to lower millage rates (rate rises to 4.07%)
-- 1% sales tax (SUT) increase for homestead/farmstead exclusion (rate rises to 7% [8% in Allegheny County and 9% in Philadelphia])
-- Require school districts to levy minimum local earned income tax (EIT) of 1% (if they haven’t yet)
-- Expanding the Property Tax/Rent Rebate Program (PTRR)
-- Expand the Senior Safety net Deferred Property Tax Program
Plan 2 - $6.437 Billion Reduction
-- The funding sources for this plan are still being calculated, but a A PIT increase of 1.55% (from the current 3.07% to approximately 4.62%) would fund this
change. If the Sales and Use tax is included, the PIT rate would then be decreased accordingly. Other funding sources could also be considered.
Plan 3 - $2.340 Billion Rebate Cap For Homesteads
-- This plan would provide a rebate to homestead properties that would be capped at $2,340 and cost approximately $5.20 billion
--The funding sources for this plan are still being calculated, but a PIT increase of 1.25% (from the current 3.07% to approximately 4.32%) would fund this change. If the Sales and Use tax is included, the PIT rate would then be decreased accordingly. Other funding sources could also be considered.
-- - Approximately 2.09 million of the 3.4 million homestead properties would see their school property taxes eliminated
Plan 4 - $5 Billion Rebate Cap For Homesteads
-- This plan would provide a rebate to homestead properties that would be capped at $5,000 and cost approximately $6.86 billion
--The funding sources for this plan are still being calculated, but a PIT increase of 1.65% (from the current 3.07% to approximately 4.72%) would fund this change. If the Sales and Use tax is included, the PIT rate would then be decreased accordingly. Other funding sources could also be considered.
-- Approximately 3.11 million of the 3.4 million homestead properties would see their school property taxes eliminated
Plan 5 - $8.5 Billion Elimination For Homesteads
-- Every single homestead property in Pennsylvania would see their school property taxes eliminated
-- The Personal Income Tax would rise from the current 3.07% to 4.82%. According to Appropriations Committee Staff, the baseline PIT rate would only need to rise
to 4.65%, but 4.82% was decided because the rate was deemed sufficient to weather an economic recession.
-- 1% sales tax (SUT) increase (rate rises to 7% [8% in Allegheny County and 9% in Philadelphia]). The tax base would not need to be expanded
Click Here for a copy of the cover letter and 5 plans.
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