Can we have different paths in achieving the same goal?

Rumors and innuendos seem to prevail in today’s society.  I guess it’s not really different from other times except that, with the advent of social media, the ease of spreading such rumors and innuendos seems to accelerate the process of misinformation.

As readers of this blog know, I am a long time advocate of HB/SB76 for the elimination of the school property tax.  I still support this legislation but I am also painfully aware that we are at an impasse.  There are political realities that exist whether I like those realities or not.  One of those realities deals with three numbers: 102, 26, and 1.

In order for a bill to become law it requires the yes votes of 102 house members, 26 senate members and the signature of the governor or, at the very least, a governor who doesn’t veto the legislation.  By not signing it all, a period of time can lapse where the bill can still become law.

In looking at both the house and senate versions of 76, we are at a point in time where we have less supporting legislators than we did in 2015.  The past elections saw some of our supporters choose to leave office or to lose their elections.

In the fight for  the house and senate versions of 76, I have invested my time, energy and resources in trying to get this done.  So have many others.  In doing so, I’ve learned a lot in the process.  That’s not to say I went into this struggle as a naive individual with little knowledge of the political systems and the way things work in government.  What I learned was some of the nuances within that system and while there’s is much that could be improved in the way government works, until changes can be made to that system we have to work within the system in place.

I’ve always accepted that the struggle for school property tax independence was going to be a hard fight.  After all, we weren’t just looking to eliminate this onerous tax, we were trying to change the way we fund public education. I understood that it would have to be a multi-faceted approach that was going to involve the skills and talents of many people.

As the struggle to free ourselves from the unfair, egregious and cruel property tax.  Many new faces came into effort.  Each of them brought new perspectives and different ways of getting things done.  That created some internal issues because not everyone agreed and rather than deal with those issues face to face, it was dealt with through backroom banter that created unnecessary division and tensions.

To be honest, I haven’t always agreed with the way things were being done but, as I said, I learned a lot in this process and one of the things that I had reinforced was the simple fact that I don’t have all the answers and I can’t possibly understand all the rationale behind a decision to do something a particular way.  Rather than allowing my lack of understanding of particular facets in this struggle, I felt it was much better to engage with these individuals, allowing them to explain their positions and then explaining my own so, in that way, we could both better understand where each of us were coming from.

I even spent eight hours in a seminar on political activism so I could better understand the direction that some were taking.  It gave me much better perspective and a more solid understanding of some of those nuances.

I’ve done the same with the opposition to this legislation.

I’m a political junkie.  I’ve been that way for a long time.  In the process, I’ve followed certain organizations and the voices of those in these organizations and had a certain amount of respect for their opinions and positions.  I didn’t always agree with them, but they did produce substantive arguments on their positions.

As I began to publicly push for 76, some of these people didn’t support elimination.  It was incredibly frustrating for me.  At times, some of that opposition made me extremely angry but rather than resort to simple character assassination through name-calling, I tried to reach out and understand their opposition so I could address their opposition talking points.

That’s how this blog went from talking about a variety of issues to becoming focused so heavily on school property tax elimination.  The majority of the blog postings here take the opposition talking points to lay out an argument of how and why I disagreed with their position using outside data and research to make my points.  In that process, I learned to hone my skills in debate.

From the beginning, I would look at opposing legislators and then study them to find out what issues were most important to them.  I then would take the property tax issue and adapt the support of that issues to develop talking points that addressed their particular interests.  Through all of that, I learned more about just how egregious this property tax problem really is.  As horrible as losing your home to a tax that exceeds your ability to pay is, the property tax spreads its tentacles into so many other aspects of our economy where its negative impact hinders Pennsylvania’s economic future.

In returning to the blogs, I’m going to admit that it wasn’t always easy to try and deal with the opposition with reason and logic especially when aspects of that opposition has come internally.  Like anyone else, I get frustrated and angry at some of the things that are said.  The easy path is to lash out publicly through character assassination or to work behind the scenes to destroy the character of the other individual in efforts to silence their voice.  The more difficult path is to try and maintain a level of reason while keeping the focus on the substance of the debate rather than on personality differences or opinions about methodology.

Unfortunately, sometimes when you try and use the reason and logic through the substantive debate approach, you encounter individuals who have no real desire to consider different perspectives and approaches.  They take the “my way or the highway” approach and become so confrontational that it becomes more and more difficult to work with them or to even engage further in reasonable debate.  You reach a point where you realize that future interactions with that individual on this subject is counter-productive and a strain on the valuable time, energy and resources of the effort.  It’s not an easy decision to make but sometimes, the decision to sever ties becomes necessary.

Throughout this period of time, It has been my pleasure and honor to work with Ron Boltz in doing town halls across the commonwealth.  During those town halls we have faced the opposition and one of the greatest honors of that process has been the ability to engage opposing views without blowing a gasket and losing it in front of the room.

Some of those exchanges have been interesting to say the least.  Now don’t get me wrong.  I don’t want to give the impression that, in the exchange of differences, we simply back off or go soft.  Remaining firm and resolve is essential to this advancing this issue but it is possible to display such firmness and resolve without throwing temper tantrums in both the public arena or through the social media.

A confrontational exchange between individuals is going to be a part of this process.  When you engage in such an exchange publicly, your conversation goes far beyond your exchange with the individual.  How you respond to someone being unreasonable in the public arena is critical because you can change the minds of others who are listening or others who are reading that exchange.

Nine times out of ten, if you resort to character assassination in an attempt to win your argument, you lost that debate in the public arena.  You appear to be the unreasonable person in that exchange and you do so by your own actions.  And believe me, I understand that resorting to character assassination might appeal to certain elements of those on the same page as you and it might motivate them.  You have to remember that, at the same time, you are alienating some who you are trying to convince concerning the validity of your argument.

Something I learned in high school.  It’s always been important to me.  The quote goes like this:

“You haven’t converted a man because you have silenced him!”

The quote comes from John, Viscount Morley on Compromise, 1874.  It comes from the publication series Great Ideas of Western Man.  My own experience in life demonstrates that this is an absolute fact.  Using power and oppression in attempts to silence the voice of others is self-gratification but such forced silence has toppled some of the greatest civilizations in history as others see these oppressive means as the tyranny that it is and begin to rise up against it.

The point is simple.  If you can’t defend your actions on reason and substance but must, instead, turn and character assassination in the attempts to silence to voice of others, you expose an Achilles heel that opens the door for your own failures in accomplishing the goal.

When it comes to the big picture of school property tax elimination, we have ended one two-year legislative session and are about to move into another.  Any legislation that hasn’t gone through the legislative process in the past two-year session must either be re-introduced or it goes the way of the dodo.

My understanding is that both HB and SB 76 will be re-introduced.  I suspect there will be some movement on debate for senior only exemptions or some push for homestead only exclusion.  At the same time, a new piece of legislation is being introduced by representative Frank Ryan (District 101) that calls for the complete elimination of the school property tax creating a new path to achieve the same end goal.

That new plan has already garnered some attention, both negative and positive.  Much of the negative response is premature.  It’s based on speculation devoid of details and, in my opinion, that debate becomes counter-productive.

The proposed legislation is still in the drafting process and it will go through some changes and see some additions as discussions with the Legislative Review Bureau continues.  Releasing a premature draft of the bill at this point in time, although some have demanded it, is irresponsible.

The last thing we need is multiple versions of a bill to become part of the debate process where those incorrect drafts of proposed legislation become part of the future debates on the bill.  Let’s wait and do it right this time.

Once the bill is completely through this process, we will have more than ample time to debate the merits of the legislation just as we have done with previous bills.  What I can and will say is that the new proposed legislation gets us to complete elimination right out of the starting gate and it is therefore worthy of our consideration before promoting blind condemnation simply because it’s not 76.

For me, the goal is complete elimination and how we get there is important.

I know Frank Ryan personally.  He became a close family friend long before he was elected to office.  He’s also a trusted and accomplished certified CPA with knowledge about economic matters that many of us, quite honestly, do not have.  I’ve watched Frank Ryan as a freshman legislator and I’ve seen him make arguments about legislation that have impressed me.

Those who know me best know that I am very Jeffersonian in my political thought and there’s one quote from Jefferson that has influenced me in so many ways.  Thomas Jefferson, when asked the purpose of the Declaration of Independence stated, that it’s purpose was:

To place before mankind the common sense of the subject in words so clear and firm as to command their assent.

I’ve seen Frank Ryan make these words come alive in his legislative debates and in his public discourse.

Having had considerable conversations with Frank Ryan about the property tax issue, I know where he stands on this issue and I know that those extensive conversations have become a part of his legislation.  Those conversations have also included Frank’s input from others and we’ve had lengthy conversations with regards to considering opposition talking points.  Nothing that Frank has suggested to me is something that raises very any concerns with me about this proposed legislation.

After all, the end goal is complete elimination and whatever is introduced must be compared to what we actually have at this point in time.  What we have is terribly unfair, absolutely regressive and is resulting in people losing their homes as the tax continues to exceed their ability to pay.

I still support the house and senate versions of 76 but I also accept the political reality of 102, 26 and 1.  If something happens where 76 actually advances and we can drum up the votes to make it happen, my support of 76 remains.  The possibility of an alternate path to achieve the same goal is, in my opinion, a good thing and I support that as well.

As I already stated, I had considerable input into the concept of the creation of this bill and I know that Frank has brought other aspects into this consideration including the comprehensive work and advocacy for 76.  He has considered the obstacles to that legislation in trying to craft an alternative path that could possibly remove some of those obstacles.

When the bill is officially released by the Legislative Review Board, we’ll have more detailed conversations about the merits of the legislation, until then, a new path to elimination, with HB and SB 76 faltering and losing legislative support, as we must admittedly accept as a political fact, this new legislation becomes a way to keep this dialogue open providing an alternate path to the same end.

 

 

 

 

 

 

The Future of School Property Taxation

The Future of School Property Taxation

Note:  The following article originates from the Pennsylvania Property Rights Association (PAPRA).  For more information on PAPRA and to read other articles of this nature, visit www.papra.org.

 

Annual increases based on the current $14 billion in school property taxation adjusted for an annual 3.5% annual increase

Year Increase from

previous year

Total State-wide Property Tax Accumulated increase from present
2019 $490,000,000 $14,490,000,000 $490,000,000
2020 $507,150,000 $14,997,150,000 $997,150,000
2021 $524,900,250 $15,522,050,250 $1,032,050,250
2022 $543,271,758.75 $16,065,322,008.75 $1,575,322,008.75
2023 $562,286,270.31 $16,627,608,279.06 $2,137,608,279.06
2024 $581,966,289.77 $17,209,574,568.83 $2,719,574,568.83
2025 $602,335,109.91 $17,811,909,678.74 $3,321,909,678.74
2026 $623,416,838.76 $18,435,326,517.50 $3,935,323,517.50
2027 $645,236,428.11 $19,080,562,945.61 $4,590,559,945.61
2028 $667,819,703.10 $19,748,382,648.71 $5,258,379,648.71
2029 $691,193,312.70 $20,439,576,041.41 $5,949,572,961.41
2030 $715,385,161.45 $21,154,961,202.86 $6,664,958,122.86
2031 $740,423,642.10 $21,895,384,844.96 $7,405,381,764.96
2032 $766,338,469.57 $22,661,723,314.53 $8,171,720,234.53
2033 $793,160,316.07 $23,454,883,630.54 $8,964,880,550.60
2034 $820,920,927.07 $24,275,804,557.61 $9,785,801,477.67
2035 $849,653,159.52 $25,125,457,717.13 $10,635,454.637.19
2036 $876,391,020.10 $26,001,848,737.23 $11,511,845,657.29
2037 $910,064,705.80 $26,911,913,443.03 $12,421,910,363,09
2038 $941,916,970.51 $27,853,830,413.54 $13,363,827,333.60
2039 $974,884,064.47 $28,828,717,478.01 $14,338,711,398.07
2040 $1,009,005,111.73 $29,837,722,589.74 $15,397,716,509.80
2050 $1,421,671,028.70 $42,047,743,676.81 $28,047,743,676.81
2058 $1,937,909,710.01 $57,306,758,567.55 $42,306,758,567.55

 

According to the Independent Fiscal office, if trends stay the same, the school property tax will increase state-wide by 3.5% annually.  3.5% isn’t an alarming number.  3.5% of $14 billion doesn’t sound threatening. It actually sounds sort of sustainable but is it really?

The above chart demonstrates how this translates into real numbers.  Let’s start by understanding that it requires tax increases to generate this revenue.  In the past 20 years, you didn’t see a SUT increase or a PIT increase to generate additional revenue because those taxes generate natural growth.  The property tax does not.  It must be raised to achieve the revenue it wants.  That is the problem with the Property Tax.  In order to sustain the revenue growth that is wanted from the Property Tax, the statewide property tax burden on property owners must increase.

To the opponents of eliminating the property tax because it’s a spending problem, it’s not that I disagree with that sentiment, but by fighting against elimination you are fighting for tax increases.  Other opponents who use the robbing from Peter to pay Paul argument are also ignoring that the property tax requires increases to sustain its revenue demands.

Certainly, if we shifted from a Property Tax to a blended Income and Sales Tax, initially we would see a dollar for dollar shift of taxation.  That’s only the immediate change.  The long term is something very different.  By shielding the property tax, next year it will cost you more, and the next year even more and it will keep up demanding more and more until there isn’t enough to sustain it and then it all collapses, possibly even taking the economy of the entire state down with it.

The Independent Fiscal office already stated that there is an initial cost benefit to shifting to the PIT and SUT tax, they did not, however, explain the long-term savings by eliminating the additional tax burdens that we see each and every year.  By shifting today, we eliminate every future increase of the property tax burden on taxpayers across the Commonwealth.

We know that, through the PIT and SUT tax, we can generate additional revenue for our schools and we can do so naturally without the need for tax increases.  We can not do that with the property tax.

It is only when we look to the future. if we follow the trends, that we begin to see the absolutely unsustainability of the path that we are on.

We are currently at $14 billion in revenue that came from tax increases.  Using the 3.5% average increase established through historical trends, according to the Independent Fiscal office, we can chart where will be in the future and that future, as the chart reveals is absolutely unsustainable.

By 2039, in just 20 years, we will add another $14.34 billion dollars to the tax burden of property owners.   At that point in time, the additional annual burden to tax-payers in the state will grow by more than $1 billion dollars a year so that, in just 12 years, we will add another $14 billion dollars for a total property tax burden of more than $42 billion dollars., Future annual statewide property taxes increases will exceed $1.5 billion dollars a year, the following year.  In 8 more years, we will add another $14 billion to the property tax burden and future annual statewide property tax revenue increases will exceed $2 billion dollars.  In just 40 years, the property tax burden will quadruple increasing more than 400% from where they are now.

If you think property taxes are a senior problem, look down the road to your own future.  A 3.5% does not yield a stagnate annual increase.  The increase grows incrementally each year.

If you are 50 now, by the time you are 70, the statewide School Property Tax burden will double.  Will you be able to sustain that?  Will your wages increase enough to provide for that?  Remember that you’ll be in your retirement age?  Will you even be able to retire if you want to stay in your home.

If you are 40 now, by the time you reach 70, the property tax burden will more than triple.

If you are 30 years old, by the time you are 70, your property tax burden will have quadrupled.

If you are looking at a newborn, they’ll be 40, probably hoping to raise their family by establishing roots in their communities.  What chance do you think they’ll have will they have to do so here in Pennsylvania?

According to the census Bureau, 20 years ago the median household income was about $42,000 in Pennsylvania.  Today, according to the Census Bureau, the median household income in Pennsylvania is $56,907.  That’s a 27% increase.

It didn’t double during that time period and it’s not likely to do so in the next 20 years.  Can a 27% increase in household income over the next 20 years sustain a 100% increase in the property tax burden?

3.5 Projected grwoth of property Tax Burden

This is the future the opponents of school property tax elimination have embraced!  This is the results of an annual 3.5% increase in school property taxation.  To reach that level of revenue for 2039 we will need to see $14 billion dollars in tax increases doubling where we are now.  The statewide property tax burden will double.

What impact will this have on working families in Pennsylvania?  What impact will this have on the small business community?  What will this do to family farms in Pennsylvania?  What will this do to seniors on limited income?

The facts should be clear.  The path we are on cannot be sustained.  This places homeownership in jeopardy; threatens the future of small businesses and our family farms; puts our schools and the futures of our teachers in peril and is a threat to the entire economy of the Commonwealth of Pennsylvania.

During an PSBA interview with the Independent Fiscal Office, the IFO explained that by shifting to a PIT and SUT tax to replace all school property taxes in Pennsylvania could see a 3.4% increase in revenue.  In other words, based on previous trends, we would generate additional income to our schools that is .1% less than what they are getting through the school property tax.

Not factored into this equation is the employment benefit of shifting to this system of taxation.  We know that Property Tax Exemptions (Keystone Opportunity Zone) for the small business community works for as long as the exemption stays in place.  Unfortunately, when that exemption expires, many small businesses that take advantage of the program find themselves unable to sustain the change in their business when the KOZ expires.

The revenue necessary to provide for the KOZ comes from increasing the property tax burden on all other property owners.  The same is true for other programs like LERTA (Local Economic Revitalization Tax Assistance) and Clean and Green.

By eliminating the school property tax, we also eliminate the additional burdens we levy on other property owners to provide for these programs.  By providing school property tax exemption for all businesses and making those exemption permanent the entire state becomes a Keystone Opportunity Zone without shifting that burden to other taxpayers.  Because there is no expiration of that exemption, those businesses will remain in our communities.  This will generate more business in Pennsylvania which will translate into more permanent jobs.  That will increase the revenue from the PIT.  It will also provide more disposable income for families which translates into purchasing power which will generate more SUT revenue.

By shifting to PIT and SUT taxes, without the need for future increases to provide the same revenue to our schools, all of Pennsylvania benefits without the need for these dramatic increases we see in future property taxation.  We can sustain future education funding without crushing our economic future.

The extended benefits of making Pennsylvania a better place for small business growth reaches beyond providing for education funding.  More jobs in Pennsylvania will also increase the PIT revenue currently used in our General Budget.  It will also increase the SUT revenue.  Remember, only the increase in the PIT and SUT tax goes towards education funding, the exiting 3.07% of the PIT and the existing 6% of the Sales Tax would still go towards the revenue that funds the rest of the State’s budget.

This additional revenue could go towards other important social programs, reduce the state debt burden and provide for other essential needs in the commonwealth.  It could be used for providing for other education needs by increasing the State portions of the Basic Education Funding Formula or steered towards reducing college costs in the State System of Higher Education.  Wherever that revenue would go, instead of constantly looking for new things to tax to generate more revenue, we provide more revenue but eliminating a bad tax policy….school property taxation for education funding.