Voters in Pennsylvania’s off-year election Tuesday will be asked to cast ballots on a “Property Tax Exclusion.” The Inquirer’s Laura McCrystal wrote in detail about this property tax proposal here.
It might sound like a tax break. But it isn’t quite: What it does is to give your local town government more power (it already has some) to eliminate the local property tax on homeowners and substitute it with higher income taxes, or maybe a local sales tax or fees, writes James M. Brower Jr., of Marks Paneth LLP and the Pennsylvania Institute of CPAs.
“Back in 2007, all school districts in Pennsylvania (except for Philadelphia) were required” to hold votes on whether to let their local towns exempt people’s major residence from up to 50 percent of the local property tax, if they could come up with other taxes.
The result: “Less than 2 percent had a majority of their residents approve an income tax increase in exchange for a property tax decrease.”
This time, “if the referendum passes,” towns can scrap the whole property tax on homes, so “it is possible that in the future we may see local tax authorities asking their residents to vote on imposing additional local earned or personal income taxes to provide for a complete exemption from property tax for homestead owners in the jurisdiction.
“The legislature might also allow the jurisdictions to impose additional sales or other taxes, although current legislation does not provide for that.
“Alternatively, instead of holding local voter referendums, the legislature might decide to fund local property tax relief by allocating additional state funding to jurisdictions that have enacted increased homestead exemptions.” But no guarantees that will happen, either.
This is, in short, a typically Pennsylvania solution to the long-simmering reaction against relentlessly rising property taxes: Let towns ease the unpopular tax burden on local homeowners (voters) if they are willing to squeeze the people as workers, or consumers, or through some other set of taxes.