|
Towards a Fairer System of Taxation
Posted 06-9-2001
This past week, I was very happy to host the County Commissioners
Association of Pennsylvania (CCAP) Executive Committee for its quarterly
meeting and a policy forum on tax fairness at Westmoreland County Community
College. The forum was the beginning of our association's effort to raise
the level of awareness on the issue of tax fairness. We believe the
Pennsylvania legislature's previous efforts at tax reform have been
unsuccessful, and our proposal for flexibility in the forms of taxation for
county governments would be a step forward in truly relieving the taxpayers'
property tax burden.
The three-hour forum included
county commissioners from eight counties, representatives of the chambers of
commerce and economic development agencies, the Farm Bureau, local
governments, and senior citizens. CCAP presented its proposal for tax
fairness and then received input from the groups' representatives. It was
the first of a number of planned events CCAP will hold to encourage the
legislature to tackle the issue.
The County Commissioners
Association is proposing a system that allows counties to participate at
their discretion and offer a 1% county income tax added to the state's
income tax. It would include both earned and unearned income, such as
interest, dividends, and other non-wage related sources. Like the state's
system, it would be more sensitive to an individual's ability to pay.
Another option for counties would be a 1% sales tax that also gives
consumers more control of how much they pay by the purchasing decisions that
they make. It would be implemented on the same basis as the state and would
be shared with municipalities to address the special fiscal needs of
entities that cannot generate sufficient revenue from their own tax bases.
We are suggesting these
options for counties without an implementation referendum or a "back-end"
referendum requirement. But, there should be a provision that mandates
counties to reduce property taxes accordingly to ensure that there is no
windfall for counties. We are sensitive to the perception that some folks
will cry "massive tax increase". That is simply not the case. No one raises
taxes just for the sake of raising them. If that were the case, every county
would be at their legal limit.
County government is the
fastest growing level of government in Pennsylvania because the Commonwealth
sees us as the best level for the provision of services. Unfortunately, the
Commonwealth's service requirements are generally not accompanied by
adequate funding. Consequently, counties must go back to the their taxpayers
to make up the difference. Counties rely almost exclusively on the real
property tax as the local tax base. While the perception is that the public
complains about school taxes, they do not really differentiate among who
levies the property taxes, as much as they complain about the inequities of
the tax.
Since counties vary in their
local economic and demographic circumstances, identifying one tax
alternative simply won't fit for all counties. We are looking to repeal
nuisance taxes, decrease the reliance on real property taxes, and implement
taxes based on the ability to pay. We are recommending having the ability to
tailor a tax system to local economic and demographic circumstances.
Polling has shown that the
public supports changes in our system of taxation and our strong desire to
reduce the reliance on real property taxes. The public wants tax base
decisions to rest at the local level rather than in Harrisburg, and they
want the legislature to deal with the issue meaningfully, rather than the
weak effort that delivered the Homestead Exemption. The polling also shows
overwhelming support for income and sales taxes as the primary new tax
bases, believing them to be more "fair" than property taxes.
The income tax is certainly
more progressive than property tax. As with the state's income tax, it is
predicated on an individual's ability to pay. Property tax does not consider
an individual's ability to pay. A senior living on social security and a
small pension pays the same property tax for an equally valued home, as a
family with two wage earners.
The important aspect is for
counties to have flexibility in how they tax. What works in one county may
not work somewhere else. One of the commissioners at our forum was from
Chester County in southeastern Pennsylvania. She told us how Chester is the
wealthiest county in Pennsylvania, but that it borders the state of
Delaware. While they may be comfortable shifting the property tax burden to
an income tax, they would not want to increase the sales tax. Delaware has
no sales tax, so they would not want to encourage consumers to shop across
the state line.
In Westmoreland County, we
would look at a combination of income and sales taxes. With a large senior
population, property taxes are a major burden. Even though our proposal is
to replace a portion of county property taxes, and school taxes are still
the largest part of a property tax bill, relief is relief. Counties are
likely to be in a better position to make changes in the form of taxation
than school districts. Since taxpayers do not differentiate when paying
their property taxes, the CCAP proposal can make a difference.
Without the taxpayers' voices
being heard, our proposal will have a difficult time getting legislative
attention. History has shown reluctance by the legislature to tackle this
issue. But if your legislators hear from enough taxpayers, they may realize
it is time to implement a fairer system of taxation. |
