When our state legislators return for the 2016 session they will be asked to vote on the ‘School Property Tax Elimination Act.’ The Bill, if it becomes law, will eliminate that portion of the property tax that is allocated to school districts. Any reduction in the cost of owning a home, piece of land, or a commercial property, can result in an increase in market activity. The more real estate that is bought and sold the better it is for the local economy, and is always good for the real estate community in particular.
The Pennsylvania Association of Realtors (PAR) supports the Bill. The PAR commissioned an independent study to look at the effects of the Bill. In essence, the new law would get rid of property taxes that are dedicated to school districts, and replace that revenue by increasing personal income tax from 3.04% to 4.34%. Sales tax would also increase by 1%. Some currently exempt items would become taxable – shoes costing more than $50 for example.
Schools should not suffer should this change come into force because the state would replace the lost revenue with the new revenue. Initially, operating costs would be covered, based on last year’s needs, adjusted to allow for inflation. The allocated funds would increase, either according to inflation or by the rate of increase in sales tax revenue – whichever is lower. If a school district believed it needed more than the state allocation, the extra could be raised by implementing a personal or earned income tax if a no-exception public referendum approved it.
2016 will be an interesting year for us. Whether you are a Realtor, a property seller or a buyer, please remember that we, at Liberty Land Transfer, are always here to answer your title questions. And please remember to contact us by clicking here to have those questions answered or to raise your new title orders.