Swapping school property taxes for increased sales and income taxes could be the solution for the decades-long battle over how to fund basic education in Pennsylvania.
A bipartisan coalition of state lawmakers unveiled the latest version of the Property Tax Independence Act on Tuesday.
Under the legislation, school district property taxes in Pennsylvania would be replaced with increases in the personal income and state sales taxes. This would cause the personal income tax to increase from 3.07 to 4.34 percent and the sales tax to increase one percentage point across the state.
State Senator John Yudichak (D-Luzerne) said there's a strong need and desire to replace property taxes.
“This is the first start of the discussion in this legislative session," he said, "but I hope the strong showing (on Tuesday), literally, over 25, 30 legislators at the press conference (Tuesday) pushing for the elimination of property taxes in Pennsylvania.”
Rep. Rick Saccone (R-Allegheny/Washington) said even though some taxes would be raised, many Pennsylvanians would be paying less.
“If you’re paying $7,000 a year in property tax, at a 7 percent sales tax rate you would have to spend $100,000 in sales taxable items to spend as much as you’re spending on property tax.”
Under the legislation, any increase in taxes toward school funding has to be approved by voter referendum.
Saccone said this will help districts to plan better and make cost increases more reasonable.
“It forces both sides to say, ‘Hey look: I don’t have to just convince five of nine people on a school board to vote for it anymore, I have to convince the taxpayers. And so I have to be more reasonable about what I do,'” he said.
Aside from an increase in the sales tax, the plan would also expand the tax to cover items such as clothing costing more than $50, nonprescription drugs and candy.
The proposal would not eliminate county and municipal property taxes.