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Compromise needed on Pennsy tax switch

August 15, 2002|by BOB MAGINNIS

Lawmakers preparing for the Pennsylvania Legislature's Sept. 4 special session on property taxes all agree on one thing - they're too high. What they're hung up on is how much they'll boost other taxes to make up for what will be lost if the property levy is cut.

Lawmakers should quickly discard those proposals that don't address the hard choices and work toward compromise.

The Associated Press reports that at least 70 different bills have been crafted to cut property taxes. Some would compensate by increasing the state's personal income tax, while others would adjust the school-funding formula to increase the state's share.

The Pennsylvania School Reform Network is backing a bill sponsored by Rep. Nicholas Micozzie, R-Delaware. In exchange for a $2.6 billion property tax cut, Micozzie's bill would hike the personal income tax rate from 2.8 percent to 4.6 percent.

Another bill by Sen. James Rhoades, D-Schuylkill, would cut property taxes by 69 percent and increase the state's share of education funding from 38 percent to 74 percent, by hiking the personal income tax rate to 4.8 percent.

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Gov. Mark Schweiker hasn't said which bill he's favoring, probably because the Legislature forced him to call the special session. Schweiker's strategy for the last budget was to avoid tax hikes at all costs and it seems unlikely he'll back one before the November election.

The argument against relying so heavily on property taxes for school funding is that those it hits hardest own their own homes but live on fixed incomes. The argument for it is that property is where the wealth is.

Making the state pay a larger share of school costs would allow the state to equalize expenditures between poorer and more affluent school districts, but would also make school budgets more subject to the whims of the Legislature.

The likely result of this session will be a bill that somehow splits the difference, raising income taxes less than some want and cutting property taxes less than others have suggested. Such a compromise shouldn't be a surprise, when lawmakers try to enact sweeping reforms right before an election.

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