group of mostly conservative thinkers has advocated patriotic-sounding Property Tax Independence Act, In a bid to make themselves sound like the Founding Fathers, they call their bills HB 76 and SB 76. Their logo also is surrounded by 13 stars. I guess that's in honor of the 13 original states or something. Basically, their plan is to phase out property taxes over two years and then play their fifes and drums and recite the Pledge of Allegiance.
In Easton, Democrat Mayor Sal Panto is so terrified of raising property taxes to meet that City's obligations that he instead imposed an unpopular commuter tax.
No question about it, property taxes are unpopular, and are particularly unfair to seniors on fixed incomes.
But according to The Wharton School economist Robert Inman, the property tax is probably the fairest of all the taxes imposed by local government. He was one of the featured speakers at a Lehigh University Symposium on Friday on the crisis in local government finance.
His specific point of reference was the city, where taxes are higher than in the 'burbs, and his basic argument is that all taxes are bad. But as we all know, they are a necessary evil. He explored which taxes do the least harm. Believe it or not, it's the property tax. He did the math and everything.
Property taxes are evil.
If Philadelphia's tax rate of 2.99% were to increase by just 1% to 3.99%, Inman calculates that average city property values will decline by 20%. "That's a pretty big effect," he notes.
Business taxes are evil.
This is a tax on business activity, not profit, and can be devastating to a new business. If Philadelphia were to increase its gross receipts tax rate by just 0.10%, the net result would be a 4% decline in the City's business activity.
Wage and Commuter Taxes are evil.
Those taxes cause jobs to leave a City. Philadelphia woke yup to this reality and has begun to reduce its wage and commuter taxes. Reducing the resident rate from 3.93 to 3.76%, and the non-resident rate from 3.50 to 3.35%, is expected to result in an 8,375-job increase by 2018.
Tax It Where It Lives, Not Where It Works
According to Inman, the fairest way for a City to tax is by moving from a mobile to an immobile tax base. Commuter taxes, wage taxes and gross receipts taxes just drive business and jobs away. Lowering the wage tax will result in more job, more income and encourage people to live where they work by investing in real estate. he would increase real estate taxes, but homeowners who live in their homes would be afforded a partial exemption.
All of this was in a 2009 Task Force recommendation that was never implemented.
The political winds, however, have been blowing the other way.