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Property Tax Reform in Pennsylvania. for the South Central Assembly Feb. 20, 2013 David W. Davare, Ph.D. Property Tax . Current system Revenue and importance Limitations and special issues Tax levy methodology Assessment issues Reform and related issues. Used by. Used by. - PowerPoint PPT Presentation
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Property Tax Reform in Pennsylvania
for the South Central Assembly Feb. 20, 2013
David W. Davare, Ph.D.
Property Tax
Current systemRevenue and importanceLimitations and special issuesTax levy methodologyAssessment issuesReform and related issues
Used byEntity Number % of local
revenue% of total revenue
County 67 92% 29%
Municipal 2450+/- 49% 81%
Schools 500 78% 41%
Used byEntity Number
Reported (Total)
Year of Data
Total RE Tax Revenue
County 58 (67) 2009 1,942,756,051
Municipal 2502 (2450+/-)
2010 1,576,530,198
Schools 500 2009-10 10,757,487,536
Property tax revenue
Total RE Tax $14,276,773,785
2010 Taxable Income $310,368,447,000PIT at 4.59% + 3.07% or 7.67%
2010 Taxable Wages $245,629,659,000EIT at 5.81%
Property tax limits 2nd Class A Counties, 30 mills 2nd, 3rd to 8th class Counties, 25 mills3rd Class Cities 25 millsBoroughs, 30 mills1st class townships, 30 mills2nd class townships, 14 millsHome Rule Governed by their charterSchool districts 25 mills excludes salaries,
benefits and debt
Property tax limits
For 3rd to 8th class counties, Cities, Boroughs and Townships, an additional 5 mills may be imposed with the approval of the county court.
Codes authorize various special purpose levies for debt service, capital projects, fire hydrants, street lights, libraries, etc.
Pa Constitution
Article VIII Section 1: Uniformity of taxation
All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.
Exceptions to taxation
Tax exempt properties Act 319 Clean & GreenLERTA/TIF/KOZ-KOEZHomestead/Farmstead (Act 50/72/1)
Tax reform attempts
1988-89 Casey plan1996 – Act 502004 – Act 722006 – Act 1
Tax reform attempts
All shift from property to income. Both earned and personal incomeAct 72 and Act 1 included
homestead/farmstead exclusionsAct 72 and Act 1 opened
homestead/farmstead to municipals as well as Schools
Property tax calculation
Assessed value * millage * collection rate
= Revenue
Assessment of property
No state mandates on assessment No required reassessment Third class cities can do own
assessment (Reading) Assessment my use either price,
or replacement value
Assessment of property
Assessment my use either purchase price or replacement value
Assessing county selects base year County establishes pre-determined
ratio (market to assessed)
Assessment of property
Land value taxation has limited authority in PA
May be used by 3rd class cities and 3rd class school districts that are co-terminus with 3rd class cities
Assessment of property
Government entities situated in 2 or more counties must equalize using STEB estimates of market value.
Tax reform proposals have
Only address where local dollars come from. Do not address demands and limitationsShifting from property to income, without
consideration of commercial property tax revenue
Shift the business tax burden to individuals. Failed to consider appropriate mix of taxes
Tax reform proposals haveIncreased property taxes by repealing
alternative taxes available under Act 511Encouraged increased rate on earned income. Left personal income to local choice Most proposals expand disparity of wealth as
defined by property and incomeRequire a “one-size-fits-all” approach to local
tax reform.
Tax reform proposals shouldInclude state funding as part of the debate.Include an appropriate mix of taxesRequire counties to maintain a uniform state-
wide ratio of assessed to market valueRequire uniform assessment practices Require the regular reassessment of real
estate at stated intervalsFully fund mandates on local governments
Tax reform proposals shouldProvide state-wide support for assessment of
specialty property (utility production facilities)Supplement tax reduction/abatement
programs such as Act 319 (no local choice)
Discussion time