Bill > HB13

Introduced Session

Amending Titles 53 (Municipalities Generally) and 72 (Taxation and Fiscal Affairs) of the Pennsylvania Consolidated Statutes, eliminating school district property taxes; imposing county and school district taxes; establishing the School District Emergency Fund and the School District Property Tax Elimination Fund; consolidating Articles II and III of the Tax Reform Code of 1971; in preliminary provisions relating to sales and use tax, providing for definitions; in taxation generally relating to sales and use tax, providing for exclusions and for transfer to county sales and use tax accounts; and, in preliminary provisions relating to personal income tax, providing for definitions; and making related repeals. This act may be referred to as the School Property Tax Elimination Act. The General Assembly finds and declares as follows: (1) School district property taxes are a fixed expense for property owners, which creates an unsustainable and regressive system of taxation impacting our fundamental rights of life, liberty and property. School district property taxes are not reflective of a property owner's ability to pay and are regressive in nature. (2) The current rate of increase of school district property taxes is unsustainable due to factors frequently beyond the control of local school officials and school boards, including underfunded pensions, rapidly escalating health care costs, more complex educational requirements for students and unfunded mandates. (3) School district property taxes impact individuals differently. For example, if spouses are retired and one spouse passes away, the income reduction caused by the death is immediate, but the school district property tax burden remains unchanged. Other factors impacting older Pennsylvanians' ability to bear the burden of school district property taxes include the amount of financial assets in retirement, health, mobility and the proximity of family members. School district property taxes are problematic for working families as well, with young working families bearing the brunt of funding the State while managing such financial burdens as income taxes, exploding health care coverage costs and day care expenses. (4) This Commonwealth faces an additional risk through its tax structure and limited job creation, as young working families continue to relocate from this Commonwealth, partly as a result of Pennsylvania's tax system being specifically geared to taxation of income from working citizens, with retirement income not being taxed. (5) The Independent Fiscal Office reports that Pennsylvania is attracting more seniors as residents because of the tax status in this Commonwealth of retirement income, particularly when compared to neighboring states. (6) The demographic changes to this Commonwealth, fueled by the combination of the exodus of younger people from this Commonwealth and the migration of older people into this Commonwealth, have precipitated a growing financial crisis. (7) School districts are fixed cost-intensive operations and seek stability in funding through property taxes, but the predictability and certainty of school district property taxes create contradictory impacts on property owners in meeting their tax obligations. (8) School district property tax reform must be accomplished in an equitable manner in the form of the total elimination of school district property taxes for residential and commercial properties. Businesses in this Commonwealth alone cannot and should not bear the financial burden caused by the elimination of school district property taxes on residential property only. (See 53 Pa.C.S. § 9011(a).) (9) School district property tax reform must also include rental properties, whereby each landlord must reduce rental payments required of each residential or commercial tenant in an amount equal to the reduction of taxes on real property attributable to a tenant's unit. (See 53 Pa.C.S. § 9017.) (10) This act provides for the elimination of school district property taxes through the following: (i) An increase in the sales, use and occupancy taxes, whereby a new or additional 2% tax shall be imposed on certain items and that money distributed to each county of this Commonwealth, which shall disburse money to school districts within the county from the School District Property Tax Elimination Fund. (See 53 Pa.C.S. Ch. 90A Subchs. C and F.) For this purpose, certain exclusions from taxation are eliminated, including certain clothing, food and beverages. (See 53 Pa.C.S. § 90A22(b.1).) (ii) The imposition by each school district of a local tax on the personal income of resident taxpayers of the school district up to a maximum rate of 1.85%, the revenue from which shall be collected by and be solely for the use of school districts. (See 53 Pa.C.S. Ch. 90A Subch. D.) For this purpose, compensation is expanded to include taxation of old age or retirement benefits, with the exception of Social Security benefits. (See the definition of "compensation" in 72 Pa.C.S. § 2102, which effectuates these changes.) (11) This act is not intended to reduce expenditures made to school districts in this Commonwealth. The purpose of this act is to shift a source of local school district funding away from school district property taxes in a manner that does not negatively impact school districts.

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Frank Ryan (R)*,  Bud Cook (R),  Tracy Pennycuick (R),  Thom Welby (D), 

Referred to FINANCE (on 02/24/2022)

Official Document