Property Tax: If you’re not part of the solution……..

And I’m the one who will not raise taxes. My opponent now says he’ll raise them as a last resort, or a third resort. But when a politician talks like that, you know that’s one resort he’ll be checking into. My opponent won’t rule out raising taxes. But I will. And the Congress will push me to raise taxes and I’ll say no. And they’ll push, and I’ll say no, and they’ll push again, and I’ll say, to them, ‘Read my lips: no new taxes.”

Those last six words became the sound bite from the 1998 Republican National Convention from Presidential hopeful George H. W. Bush when he accepted his nomination.  Those last six words also made George H. W. Bush a one term President.

20 years later Governor Corbett made a similar pledge to the people of the state of Pennsylvania.  He signed on to the Taxpayer Protection Pledge advanced by Grover Norquist’s Americans For Tax Reform which stated:

I, Tom Corbett,  pledge to the taxpayers of the State of Pennsylvania, that I will oppose and veto any and all efforts to increase taxes.

The new transportation makes the third time since he’s taken office Corbet has violated this pledge to Pennsylvanian’s and each time he’s used political rhetoric to try and weasel his way out of it.  That’s according to Norquist but he’s ignoring something in the process.  Corbett’s rebuttal is that in each instance a fee is attached that is not a direct tax seen by Pennsylvanian’s when they purchase something.  That’s certainly true with the new gas tax but to pretend this tax won’t be picked up by the consumer, as all business or corporate taxes are, is simply delusional.

The new gas tax means that over the next 5 years we could see an increase of about 25 cents per gallon at the pumps.  The majority of the cost of this new tax will go to necessary infrastructure repairs, certainly a necessary function of government, but for the average Pennsylvanian, a 25 cent increase in a gallon of gas translate into an additional $200 a year in gas costs just to travel back and forth to work since the average travel time to work is about 30 minutes.

Since the passage of the Transportation bill my inbox has been flooded by “concerned” tax payer groups and this is understandable.  Many of those groups have also been silent about their support of another piece of legislation, some of them in violent opposition.

Here’s is what Norquist and all these other groups seem to miss.  Yes, over the next 5 years we could be paying another 25 cents per gallon to pay to repair roads and bridges that are collapsing.  Last year, the plethora of unfunded mandates pushed down on our local governing bodies by the state has resulted in increases in the property tax which, in turn, resulted in the net loss of homes to more than 10,000 people in the State.

Now before you read on,  I believe there is a solid moral principle in opposing property  taxation as a means to fund education.  I believe that the property tax, as it is now abused, is against every principle of Life, Liberty and Property that exists.   I’ve made those arguments in previous postings in this blog so if you want to read those moral arguments I suggest you go to read one of those articles.  This article is to point out the sheer hypocrisy of our opponents who are now in a huff over the gas tax but are just fine with the property tax.

This year the outstanding property tax related lien debt exceeded $1,000,000,000 by the third quarter in the state.  Over the next five years, the same amount of time it will take to see that 25 cent increase per gallon at the pumps, the projected impact on property taxes as a result of the do-nothing legislative body when it comes to pension reform, could see a minimum of 30% increase in property taxes just to cover the pensions.  Looking at the previous trends in property tax increases this means we could see a 50% increase in property taxes in the next 5 years  or a doubling of that rate in the next 10 years.

You see, something that Norquist and these other “conservative” PACS continually miss is that every time the property tax increases as a result of unfunded mandates at the state level, it’s a tax increase and that makes the batting average for the governor on his tax pledge abysmal. We have three property taxes (County, Municipal and School) and we have 67 counties.  Anytime one of them increases as a result of another unfunded mandate, even if the state doesn’t want to accept the burden, it’s still their fault.  We’re talking about the potential of 201 increases through the property tax annually.  If only one of those bodies increases that tax in each county it’s still 67 new tax increases each year.

Now I’m pretty sure that Governor Corbett might want to spin that some other way and he can do so when he talks to the press or the public.  This is my blog and that’s how I see it.  Governor’s Corbett’s batting average on no tax increases sucks!.  I’m not saying that his opponents in the next election will do any better but that still doesn’t excuse Corbett.  That’s like asking the child in the playground which bully he would rather have beat him up.  The one who hits him ten times or the one who hits him twenty. It’s a false choice because the average intelligent child would rather not be hit all.  That’s how we, the taxpayers feel, and  that, sad to say, is the problem with most elections…

Most State legislators apparently love to hide their taxes.  Take Seth Grove’s Optional Property Tax bill which would apply a mercantile or retail tax that, though hidden from the consumer, would be be paid by them through higher costs for the goods they purchase.  Besides creating a scenario where we could see as many as 501 different systems of taxation across the state as a result of this bill which would make the functions of maintaining a business in the state a nightmare and force many businesses to relocate into a school district where their taxes would not be so invasive, that then leaves the property owner to provide a greater portion of the property tax bill that is no longer being collected from the business.  That’s not a solution, it’s an ill-conceived misdirection to divert voters away from real property tax reform and the prime sponsor of the bill, Seth Grove, has stooped to amazing depths of deception and misdirection to sell this bad bill of goods to other legislators and to the people of this state.  Some of those “conservative” groups who oppose a real solution to property tax reform actually got behind Grove’s Bill and trumped it as the real property tax alternative and I have to ask myself, just what are they thinking.

Taxes should not be used for the purpose of social engineering and it’s about time this sordid truth about property taxes becomes a reality and the truth be told about the hideous beast that property taxes really are.

When property taxes were originally enacted we were an agrarian society where property and wealth production were directly connected.  That is no longer true.  Our homes do not produce wealth for us.

The first area where we see social engineering in property taxation is with the elderly.   For those who were able to provide a comfortable existence for themselves while they were working or were employed in places where substantive pensions or retirement plans were available through investments by the individual, property taxes may not really be a problem as long as both husband and wife survive.  That changes for many when one of them passes away.  Suddenly the property tax becomes a hindrance to them.  This is a couple who have worked and paid taxes their entire life and now they suddenly find themselves where keeping their home is no longer an option.  This has nothing to do with buying too much home since those seniors often already have their homes paid for.

That isn’t the majority of seniors.  The majority of seniors find themselves in a place where their only real sustainable income is though the social security.  For these people, maintaining the ever increasing property tax becomes impossible.  Next year’s COLA increase to Social Security will be 1.5%.  At the same time the Department of Education just increased the amount school districts can increase their school tax without voter referendum.  Here in the city of Lebanon, that increase can be as much as 3.4%.  Any senior currently struggling to pay their property taxes will no longer be struggling.  The cold hard fact is that they can’t pay and then they are either forced to sell their homes or they will eventually lose that home for an inability to pay their taxes.

There is another face of the property tax nightmare that is continually ignored.  Opponents of HB and SB 76 always like to roll out the cost on the poor by increasing the income and sales tax to provide for education funding.  I’d be more willing to listen to this argument if it wasn’t built upon a false premise.

Lets start by looking at what the property tax does to the cost of goods and services.  The farm or land the provides the raw materials pays a property tax.  The business that uses those raw materials to provide the good we purchase pays a property tax.  The warehouse that stores those goods is paying a property tax.  The store or business that sells those goods is paying a property tax.  In between each of these points are shipping companies also paying a property tax.   By the time you actually go to the store to purchase that item, you could see the impact of the cost of property tax realized 10 times over, each time making that item you are purchasing taxable or not.

Many are understandably offended at the notion of taxing food or clothing yet have no problem with tax the land that farms use to provide the goods necessary to provide those items; no problem with taxing the land of the companies that manufacture those items; no problem with taxing the land of the retail outlets that provide those items and no problem with taxing the land the shipping companies operate off of to provide transportation of those goods in between each step of this process. Isn’t that hypocritical?

This impacts the consumer base through higher costs for goods and services.  Naturally, the very people that use the impact on the poor to fight against  property tax elimination through HB and SB 76 have no problem with seeing those same people paying higher prices for goods and services through hidden taxes that drive up the cost.

Take something like corn.  We’ll tax the land that corn is grown on.  We then tax the shipping company that moves the corn from the farm to the business that sells it, either directly to the grocery store or to a manufacturer.  If it goes to a manufacturer, like a canning company, once again we tax the land of the shipping company and we tax the land of the manufacturer.  The manufacturer then sells that can of corn to distribution center.  More shipping.  The redistribution center then sells that can of corn to the retailer who is also paying a property tax.  At each step of this process that ear of corn got a little bit more expensive.  It may be barely negligible on that single can of corn but when multiplied by each and every item you purchase every time you go to the grocery store we need to ask ourselves exactly how much more are we paying for these necessary goods just because there is a property tax.

We’ve been told that we’ve been fighting for this for 30 years and we’ve gotten nowhere.  That’s not true.  The people have this state has received a return on their investment of supporting legislators and “groups” that fight against elimination.  It has artificially inflated the cost of goods and services while making the job climate in state less sustainable for family supporting jobs and nowhere does this hit harder than with those families who earn below the median income.

Not only are they paying more for goods and services because of the property tax.  The increasing property tax is driving up the cost of rent to those who may want to fulfill the American Dream of Homeownership but can’t make that leap because the property tax makes a home purchase an unavailable option to them.  While they may be able to afford the mortgage, once the Property Tax is factored in there is no way the family can provide the resources to purchase a home unless they do so in the cities where homes are more affordable.  Otherwise they remain trapped in rental servitude.

However, property tax impacts cities differently than it does the more rural areas.  You will find that in most cases the cities pay a higher milage rate than their surrounding rural areas.  While they may pay less int he total amount of the property tax, the percentage of their homes worth that goes to property taxes is higher, sometimes much higher.

IN an interactive map recently released by CNN Money (http://money.cnn.com/interactive/real-estate/property-tax/) we find that the average property tax in Lebanon County is $2,126.  It then states that Property Tax as a percentage of home value is 1.32%.  However an $80,000 home in the city of Lebanon is actually paying about $2,500 in property taxes or about 3.2% of home value.  How can that be?

If the average is 1.32% and city residents are paying 3.2% then there has to be others who are paying less than 1.32%.  Cities become attractive alternative for families earning below the median income because housing is more affordable but the property taxes on that home can  be double the home worth that the less affordable more rural homes.  IN other words a $160,000 home in the rural areas, something the lower income family may not be able to afford, paying 1.32% of the home worth in taxation will pay the same amount of property tax as a city resident living in an $80,000 and somehow opponents of HB/SB 76 think this is fair.

This is redistribution of wealth at the most heinous level.  Were are placing a higher burden of taxation on those least able to pay for it while making property taxation more comfortable for those more able to pay for it.  Those still comfortable in their property taxes then become harder to sell on the concept of elimination which would be of greater benefit to those least able the pay their property taxes.  In short, when the people talk about the impact of a higher PIT and Sales tax on the poor they do so while ignoring that property tax is far damaging to the very same people they seem to care so much about.

Now it only stands to reason that if an family making less than the median wage is paying a higher percentage in property taxes compared to home worth, then they are also paying a higher percentage of their income to the property tax.  This gives those below median income families less discretionary spending to pay for the times that are made more expensive by the repeated application of property taxes.

Now understand this – Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount.  When it comes to property tax that lower half is paying a higher, often much higher, percentage of both their home worth and their income to the property tax.

We can no longer afford to ignore the problem of property taxation.  Those who lie to you by saying the higher taxes are a symptom not the problem are either doing so intentionally or they really don’t understand the many ways that property tax destroys our economy.

Ask yourself why the state doesn’t generate enough money through PIT and Sales Tax to provide for the necessary repairs of roads and bridges.  Is it possible that it’s because of a property tax that leaves less discretionary spending in the hands of all tax payers but even more so in the bottom 50%?

Ask yourself why, if both the IFO and the Anderson studies conducted by the Pennsylvania Association of Realtors  say that this shift is not only beneficial to those in the lower income brackets and seniors, do opponents continue to claim the exact opposite?

Ask yourself why, if both the IFO and the Anderson studies conducted by the Pennsylvania Association of Realtors  say that this shift will make Pennsylvania a more business friendly environment which would create more family sustaining jobs and therefore increase the revenue of the state in both the PIT and income from the Sales Tax, do taxpayer groups still stand in opposition and legislators still fight against us.

The dirty and very ugly truth about property tax needs to be told and it’s been told in various form repeatedly but when have a media that generally doesn’t want to tell this story.  We have legislators who blame the housing collapse solely on those who bought too much homes when the majority of the vacant homes in the state are more that 60 years old and exist in our cities.

I have no doubt that this will be an election issue next year and it remains to be seen who will stand with the people and who will fight against them to protect this onerous and discriminatory form of taxation that places the highest burdens on those least able to pay.

There’s an old expression that says if you aren’t part of the solution you are part of the problem.  The opponents to HB/SB 76 have offered no real solutions, certainly not Representative Grove no matter what depths he’ll stoop to to lie to you about his bills.  Certainly those PACs that oppose us aren’t offering any solutions.  That means they are part of the problem and if you are living in the half where property taxes are destroying your budget it also means they don’t give a rat’s a$$ about you.

I get the anger at increased gas prices.  I also get that we need to fix those roads and bridges and that this is a necessary part of a responsible government but if the gas tax makes you mad, the property tax should have you ready to storm the Capitol.

Here’s my challenge to our opponents.  Give me a better solution.  Tell me what your proposal is and if you don’t have one then it’s time for you to sit down, shut up and get out of the way.  If you don’t have another solution then you are supporting the property tax and you have no problem with oppression so long as you aren’t the one being oppressed.

Any citizen of this state who can look at the face of an evicted home owner and say that 10,000 people losing their homes in this state isn’t a problem doesn’t care about anyone but them self and their own special self-preserving interests. Do you really think it’s okay to take a larger slice of the pie from those least able to afford it even to the point of taking their homes from them and then have the audacity to blame the people who are losing their homes?

Like many of you I agree that Pensions, Prevailing Wage reforms, Paycheck Protection and limited Government are all reforms this state desperately needs.  If you actually took the time to study the issue you’d see that one of the great enablers of these beasts is the property tax itself when the costs of each of this things is forced down to the local level through the Property Tax.

If you want to see those reforms the only way its going to happen is to force those issues back to state where we force the state to pay for those unfunded mandates or fix the problem.  Until them Property tax isn’t a symptom, it the enabling disease that makes all the other symptoms possible.

One final point, for those complaining about the gas tax but not supporting HB/SB 76.  If you had gotten behind us last year and pushed for this needed reform by now you would have seen the start of job growth and economic recovery in the state as a result of infusing the state economy with 10 billion dollars of revenue currently stolen from property owners in this state.  The majority of that would have gone into education funding but all the new growth that came as a result would have generated new revenue to the general fund and PIT tax that just might have made enough of a difference so as to make this transportation bill absolutely unnecessary.

It’s not that difficult to see how this would impact the housing industry alone which could have resulted in thousands of new jobs across the state just in new construction alone with more houses become more affordable.

Independent studies have told us what HB/SB 76 would do to the housing industry in the state of Pennsylvania in creating new jobs in construction for new homes as well as construction work for home renovations and expansion. How does this impact the state? Well, if only generate 10,000 new private sector jobs that are paying an average of $10.00 an hour (and I believe that number of jobs to be a very conservative estimate) we would see a $208,000,000 total revenue increase in the state. That results in generating $8,881,600 in taxes to the state through the PIT alone. If only 1/10 of that $208,000,000 is spent on taxable items it generates another $1,456,000 in sales tax revenue for a total of $10,337,600 of new revenue to the state. This, in my opinion, is only a glimpse as what every one of our opponents has made themselves of an obstacle to achieving in the state! That, Governor Corbett, is a real “Passport to the Future!”

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