New Castle News

April 30, 2012

Mitchel Olszak: Take a close look at tax elimination plans

Mitchel Olszak
New Castle News

NEW CASTLE — There are seemingly countless ways to tax people.

And these days, there are seemingly countless proposals for dramatically altering — or even eliminating — various taxes.

But whenever there is talk about eliminating or curtailing a tax, a fundamental question needs to be asked: Then what?

It’s easy to draw support for proposals to do away with a tax. No one really wants to pay them. Yet if a government stops collecting a tax, it no longer receives the money. What will it cut from its budget or where it will make up the loss?

In Harrisburg, there are efforts afoot to eliminate property taxes in Pennsylvania. This is a levy imposed by school districts, counties and municipalities. In many instances, it’s the major source of revenue, and for counties it’s usually the sole source of local funds.

Various proposals are being bandied about in the state capital regarding a replacement for the property tax. One, for instance, would increase the state sales tax to 7 percent, while another would boost the state income tax from 3.07 to 4.01 percent.

Any such move would dramatically alter Pennsylvania’s tax and political landscape. Local officials no longer would have to worry about facing the wrath of voters contending with property tax increases. On the other hand, municipalities and school districts would be at the utter mercy of Harrisburg if the power to levy taxes is taken away.

The concept is a slap in the face to those who argue that local control in government works best.

Obviously, doing away with the property tax has its appeal. Older homeowners, for instance, complain about paying property taxes to local schools when they don’t have children attending classes.

On the other hand, paying property taxes to municipalities makes considerable sense. Police, fire and road maintenance services all tend to be property based. Why shouldn’t property taxes pay for them?

And let’s not forget that the major benefit of property taxes is their reliability. For the most part, people make it a point to pay property taxes. In an economic downturn, income and sales taxes drop significantly.

One ongoing problem with the property tax is its somewhat subjective nature. Currently, Allegheny County is going through all sorts of gyrations over a court-ordered property reassessment process that county politicians have been fighting tooth and nail.

In response, the Pennsylvania House of Representatives recently passed a bill — by a unanimous vote — that would permit counties to ignore court-ordered reassessments.

The move may be popular in some circles, but it completely ignores the reality that court-ordered reassessments in Pennsylvania are very rare. And when they occur, it’s because local officials have shirked their responsibility to ensure fair and accurate property valuations.

In Allegheny County, officials have allowed property assessments to become a nightmare. As a result, taxes are unfairly imposed — and the heaviest burden usually falls upon low-income, older neighborhoods.

So the Pennsylvania House is saying it doesn’t care about unfair taxation. It just wants to help fellow politicians duck their duties.

There are legitimate reasons to review tax policies and question how things are being done. But taxpayers need to be aware of when they are being helped and when they are being manipulated.