Representative Frank Ryan introduced the 314-page bill on Thursday.
A state legislator has proposed a revised version of a plan he first presented three years ago this would not only eliminate school property taxes, but would make it illegal for a school district in Pennsylvania to impose one.
Of course, the plan includes some tax transfer to generate the $16 billion needed to replace lost property tax revenue for schools. It also includes new taxes on certain retirement income and on food and clothing.
R-Lebanon County Rep. Frank Ryan unveiled his 314-page House Bill 13 it is the product of five years of work and draws on the expertise of a bipartisan task force of property tax elimination advocates.
“Everyone wants to get rid of property taxes as long as the other person is the one who’s going to pay the replacement tax,” Ryan said at a Capitol press conference flanked by members of his task force. “It is clear that any solution will require sacrifices from all Pennsylvanians.”
His plan tries to distribute this burden. It would be :
- Raise personal income tax from the state’s 3.07% to 1.85%, with the additional revenue going to the local school district.
- Apply the 4.92% income tax to certain types of retirement income tax. Social security benefits, employee contributions to defined contribution plans, and military pensions or survivor benefits would be exempt. Contributions made to retirement plans by working people would be deductible from state income tax.
- Increase sales tax by 2% and only impose additional sales tax on clothing and food, excluding WIC/SNAP purchases. (Only the local 2% rate would be applied to clothing and food.) These revenues would be paid to counties, which would distribute them to school districts based on the number of public school students residing in their districts.
Ryan acknowledges that applying the retirement income tax makes his plan’s sales pitch a hard pill to swallow, but said he thinks Pennsylvanians will face this eventuality anyway.
“Pennsylvania is not a growth state. We are attracting seniors,” he said. “Do you know why? We don’t tax retirement income. We’re one of six states in the United States that don’t.
He pointed out that three years ago, when he launched a similar version of this plan, 11 states imposed no tax on retirement income.
“I will guarantee you this, the next recession we will have to start taxing retirement and you will still have property taxes. You can see the handwriting on the wall,” Ryan said.
His bill would also require landlords to reduce rent by the amount of property tax they save over the term of the current lease. This would remove caps on how much school districts can keep in their rainy day fund to help them better manage their budgets. And it would create a $500 million emergency fund that school districts could tap into if they can’t balance their budgets and force them to undergo financial restructuring.
Recognizing the complexity of his plan, Ryan Pertusio, one of Ryan’s task force members, created a calculator that allows homeowners to calculate the impact the plan would have on their tax bill at NoProp.Tax/calc.
Representative Barb Gleim of R-Cumberland County, along with Republican Representatives Dan Moul of Adams County and Mike Jones of York County, attended the press conference to learn more about the plan.
“People tell us, who we represent, that something has to change,” Gleim said. “They can’t find accommodation. Why is that? This is because landlords pay high taxes and pass them on to rents.
Hearing Ryan say that school property tax rates should double in 17 years and triple in 30 years is a consideration that cannot be overlooked, and it’s something Moul said at least that House Republicans understand as a call to action on this issue.
Gleim said: “We have to get out of the right here and now [mentality] and look at the bigger picture over the next few years and understand that something has to change.