For decades the debate over the fairness and equality of the over hundred year old system of property taxes and school funding has been waged. The recent vote in Harrisburg on Pennsylvania House and Senate Bills 76 sought to revamp the funding of public schools. Statewide, school districts reply on property taxes for approximately 70% of their funding.

To replace the approximately $10.6 billion of school property taxes being collected the bill proposed two major new funding mechanisms:

– The increase in the state’s personal income tax rate from 3.07% to 4.34%

– Raising the sales tax from 6% to 7%

– Inclusion of some items that currently have non taxable status

The bill was soundly defeated earlier this month in the State House Of Representatives, while a companion bill HB 1189, which gives school districts multiple local options for shifting their property tax sources was passed. Another bill directly aimed at senior property tax relief, SB 299, is also being touted.

The good news is that the issue of school tax property reform is being debated in Harrisburg at all. It has been a hot issue for many years, but one in dire need of discussion.

The benefits of meaningful school property tax reform are wide reaching:

– It is estimated that reform as proposed in SB 76 could raise real estate values as much as 10% statewide

– Senior citizens on fixed incomes would see a drastic reduction in taxes

– Communities with historically high school property taxes, such as Wallingford, would become more affordable to home buyers

– Buyer closing costs would be reduced substantially

– Working homeowners would see an overall tax cut. Despite an increase in federal tax, due to lower itemized deductions of school property taxes, and increases in sales tax and state income tax, the overall tax burden is offset by the elimination of school property taxes. Disposable income would hence increase.

While efforts for tax reform may have stalled out for now in Harrisburg these recent attempts to revamp the status quo have brought the issue out in the open again.

The Pennsylvania Association Of Realtors, PAR is a supporter of this proposed legislation and hosts a web site regarding SB 76. Here you can Email your local representatives with your comments, and learn more about the school property tax reform effort.

 

Wallingford PA Real Estate – Wallingford, PA 19086