S.T.O.P.

Reasons the Real Estate Tax on the homesteads in Pennsylvania must be abolished

Unfairness: The Real Estate Tax is an unfair, regressive leftover from a bygone era. Unfair, because it is impossible to compare houses and land with so many variables.

Examples: Identical houses on the same street, in the same neighborhood could vary widely in salability if one was near overhead high voltage power lines, or a nuisance bar, near another type of business that emits odor or noise, or is more difficult to access with a dangerous hidden driveway, or has more steps, or is plagued by storm water runoff that swamps the yard, etc. etc.

Further, the assessed valuation is based on basic facts with little or no details. Consider these two homes: Both have a kitchen: One is a modern kitchen with gorgeous cabinets of cherry; the other has an older kitchen that needs upgraded. Which is worth more? Both are listed as having a deck. One is 5 by 7. The other is 20 by 20. Which is worth more? One house has new, energy efficient windows; the other has older, less energy efficient, steel windows? Which is worth more?

Both have a finished game room, according to the assessment records. One was done with thin paneling that cost $15.00 a sheet, and the other has an expensive hardwood paneling that cost $45 a sheet. Also, one game room is 10 by 10; the other is 12 by 15. Are they worth the same?

Administrative and Collection costs: 3 to 5% of property taxes collected on the homestead, go to the tax collector or tax collection agency in commissions. We immediately lose 3 to 5 % of the tax money just to the collectors. Additionally, the costs of assessing properties requires a substantial staff--with salaries, benefits, etc. including administrative personnel; assessors; computer operators; mail and printing costs; hearing examiners; attorneys; phones plus phone operators, vehicles and\or vehicle expenses.

In Allegheny County--for example--there are 600,000 pieces of property including residential, commercial and industrial. 1/4 of those properties are commercial and industrial. 3/4ths are homesteads--owner occupied homes. The elimination of the property tax on the homestead would cut the number of properties to be assessed from 600, 000 down to just 150,000. A cut of 75% of properties to be assessed, should mean reduction in staff, phones, mailings, hearings, hearing examiners, etceteras. The savings should be considerable.

We believe other forms of taxation are far less costly to collect and administer.

School Inequities: Do you believe every child in Pennsylvania should have an equal opportunity for a quality education? We do. The PA. Board of Education recently stated--and we agree--real estate taxes are an unacceptable method of funding schools in Pennsylvania. Relying on the real estate tax perpetuates inequality in our schools. Schools in areas where real estate valuations are low, generally have less funding and lesser quality educational programs for the children. Those schools in affluent communities, have higher funding and greater educational opportunities for their children. Moving away from funding schools from property taxes would break this cycle of unfairness.

Senior Citizens and Disabled: While there are some programs--such as the State Lottery Property Tax and Rent Rebate Program, Act 77-Gentrification, etc. they are insufficient to help those on fixed incomes to pay the ever increasing property taxes. We have been told repeatedly of people who have been forced out of their homes they've lived in for 30 or more years, because they could no longer afford the taxes. Some seniors and disabled have lost their homes to sheriff's sale due to unpaid back taxes they simply could not pay. They not only lost the home they loved, they lost all of the equity in the home since it was sold through sheriff sale to some buyer just for the back taxes owed.

Further, the seniors who have been forced from their homes, are those who built this region, fought in our nation's wars, and paid taxes faithfully for many years. However, their Social Security and, perhaps, small pensions have not kept pace with the ever-increasing property taxes.

The physical and mental stress inflicted on these seniors and others on fixed incomes as they face the possibility of losing their home, very well could be damaging their physical and mental health. Some have ceased to eat full meals, or have cut back on their heat, or medications and other needs in an attempt to keep the home they love and, in which they raised their families.

Some seniors have sold their homes and moved to live near their children in other parts of the country.

Young Families: The KDKA Undercover Club has received numerous calls and other communications from young families who purchased a home in recent years. With their mortgage payment, they make monthly payments to their lender to cover the property taxes when they come due. Some of these individuals have reported their escrow payment has increased as much as $221 a month. That family with the $221 additional monthly payment would need to earn roughly, an additional $3,500 a year just to meet that additional payment if they can't somehow otherwise reduce other budgeted expenses.

Pennsylvania State and Allegheny County officials have agonized over the out-migration of people from Pennsylvania. Perhaps high property taxes here...versus low property taxes in other states... is one reason for their decision not to stay here. Or not to move here.

Senior Citizen Out-migration: Since the seniors are being forced to leave their home, it is not unusual for them to consider relocating entirely out of the area. Where the 'experts' had thought the young people who left in the 1980's and 90's due to lack of quality jobs here, would someday return to be near their parents, the opposite has been true. The older parents are following their adult children--in part because they can own a home elsewhere less expensively--with much lower taxes...and in some parts of the country...no property taxes at all.

Losing population results in losses of other tax revenue these individuals would have paid--such as income tax, wage tax, sales tax, gasoline tax, license fees, etc. It also results in less clout in Congress where Pennsylvania has lost a number of seats of the past several years, with two more seats lost this year.

Mobile Home Unfairness: There are many citizens in Pennsylvania who dwell in mobile homes. Mobile homes most often depreciate in value. Rarely can one sell a used mobile home for the same price they paid for it when new. Yet, this depreciation is not often taken into consideration when tax assessment is done on the mobile homes. Is this fair to those mobile home owners? Of course not.

Insurance Increases: Some property owners have reported to STOP, that when their property assessment dramatically increased, it was shortly followed by an increase in their homeowner's policy premium. The reasoning seems to be: If the county assessors believe your home is worth that much, then it should be insured for roughly that same amount. If the county is wrong--as they often are--not only are people paying higher taxes than they should, they may also be paying higher insurance premiums than they should.

Comparable Manipulation: Property tax assessments rely heavily on comparables. That has been especially true of the 2002 'houses sold comparables.' The assessors take a number of houses supposedly in the same area as the house being assessed, and supposedly comparable in size, construction, features, etc.

Let us explain how easily this can be manipulated to reach a desired conclusion. For discussion purposes let us say that your house is being assessed. The assessors' pick--let's say-- 6 comparables (any number will do for this discussion). The assessors throw out the highest and lowest and base your assessment on the average of the other four.

Your home was previously assessed at $40,000.
Example 1:

Result would mean no change in your $40,000 assessment.

Example 2:

Result would mean an additional $7,500 valuation for your home.

The system is easily manipulated based on the biases of those choosing the comparables used to compare to your home.

Chances are the homes sold in your area are not exactly like yours...or perhaps, not much like yours. There is also no limitation on how far distant the assessors can go in choosing comparables. They can fish until they find ones that are located one street away, two streets away or five streets away; that accomplishes their objective of increasing valuations to boost tax revenues. The system is easily manipulated.

Tax Free Property: Tremendous sums of tax money is lost due to tax free properties for hospitals, schools and colleges, stadiums, houses of worship, government buildings, airports, etc. Since we rely so heavily on the property tax to fund our schools, municipal governments, that lost revenue must be heaped on other real estate through higher millages.

Example: A question has been raised about the Pittsburgh Steelers training facility on the Southside. It has several practice fields and other amenities. There are no property taxes paid on this facility. Why? Because the property was developed as part of the University of Pittsburgh Medical Center as a sports medicine facility. The citizen who raised this issue questions why UPMC needs all of these practice fields for their program, or whether the development of the site by UPMC was merely a way for the Steelers to have a first class practice facility on which they pay NO property taxes.

Another example: Businesses operate inside the confines of PNC Park, Heinz Field, the State Office Building, the Federal Building, our Colleges, and our Pittsburgh International Airport. Since all of these facilities sit on tax-free land, are these businesses avoiding paying property tax as part of their rent. In other words, if the Pirates, Steelers, airport, colleges, federal building all had to pay property tax, would they not likely raise the rent for these individual businesses?

The businesses compete with other businesses not located on exempt property...which must pay property tax on the building they own; or pay property tax to their landlord as part of their rent.

It is not only unfair to the competing business who pays property tax, but likewise to the homeowner who must make up the lost revenue since these businesses are located in buildings that are property-tax exempt.

Slow Home Sales: Several Real Estate Agents have reported the sales of homes in Allegheny County are extremely slow. Other neighboring counties--not yet fully feeling the brunt of a county-wide reassessment--are having higher sales. A recent call to the Undercover Club offered a thought why younger home buyers are not jumping into the housing market despite very attractive mortgage rates.

The young woman said, "We would like to buy a house and looked at several on the same street near where we rent. First, we felt so guilty because in each of the instances the homes were reluctantly being sold by older people. The property owners said they were being forced out by the increasing taxes. Secondly, we were concerned whether we could afford to keep the house ourselves in the future, if we bought it.

"We might be able to afford the mortgage payment AND the monthly property tax escrow payment now. But, with the taxes constantly increasing could we afford to make the escrow payment in the future?" (end quote). Pennsylvania is spending considerable sums of money to convince college graduates and other young people to state here in Pennsylvania. Home ownership would likely help encourage young residents to stay. If they continue to rent, they may well be more willing to move and buy their first home in another state where improvements to their home, which can often also enhance the beauty of the neighborhood.

Many listeners say they are reluctant to make home improvements due to the threat of higher taxes. From an assessment standpoint, it is better to let the home deteriorate--along with the neighborhood--to keep one's taxes lower, than it is to make the improvement.

Privacy: Many homeowners resent the intrusion into their home by assessors. The sanctity of the home is protected by laws which indicate under most circumstances, we need not permit government personnel into our home without a warrant or imminent danger.

Eliminate the property tax on the homestead, and such intrusions would be virtually eliminated as well. The exception would be electrical or plumbing inspectors, etc. But, their visit is specific, not all-encompassing as is the case with a home assessor.

House Sale Price: The sale prices on homes used as comparables contain items that have nothing to do with the value of the home. Example: The house sale price is listed at $100,000. But in that sale price is 7% commission to the Realtor ($7,000); a land survey $750; Mortgage points--perhaps several thousand more; a professional structural inspection--maybe 500.00; etc.
That home sale being used as a comparable to determine your assessment, 'sold' for $100,000.... but really is only valued at perhaps $90,000. Yet, the full $100,000 selling price will be used to compute your real estate tax on your home, --as well as the tax on the $100,000 ($92,000) home we just described. Both homeowners are paying taxes greater than they should be.

Automatic Tax Raises: Frequent reassessments which the courts say are required to maintain 'fairness' in the system, will result in automatic revenue increases for the county, municipality and your school district. In other words, taxes can be raised on you without any vote by any elected official.

The Pennsylvania law states that no county, municipality or school district can have a tax windfall of MORE than 5% the year after a reassessment occurs.

While the law was referring to the maximum amount of increase permissible, all the taxing bodies are likely to grab the automatic 5% the reassessment brings. The reassessment should be required to be revenue neutral. Then let the various level of governments be forced to vote to raise taxes if they deem it necessary--and face the wrath of the taxpayers. Please understand, we are not suggesting this as an alternative to abolishment of the property tax on the homestead. We just used the reference to revenue neutral to point out how the various levels of government will abuse the taxpayers without being required to vote to raise the taxes.

Distressed Sales: Because of the increases in assessments and taxes in Allegheny County--soon to be followed by every other county in Pennsylvania--if it has not already happened--homeowners are putting their homes on the market. This glut of housing, the uncertainty of future tax increases, and the circus atmosphere that has prevailed in Allegheny County government for the last several years, has likely depressed the amount a homeowner can get for their house and property.

In some instances, the higher taxation has FORCED homeowners to put their houses on the market and accept less for them than they might have gotten if they were not forced to sell immediately. Who will compensate them for these government-caused losses?

Protecting the Lottery Fund: The Pa. State Lottery Fund provides for senior programs--PACE (the pharmaceutical program); Free Transportation; and the Property Tax and Rent Rebate Program. The cost of these programs is growing faster than the amount of revenue being generated by the lottery sales.

Under the Property Tax rebate program, seniors with low incomes can receive up to $500 per year toward property taxes. If the property tax was eliminated on all homesteads in Pennsylvania, the millions expended on the property tax rebate program--plus administrative costs--would be eliminated as well. Some pressure would be taken from the lottery fund; and perhaps, some, but not all of the money saved could be applied to increasing the rent rebate program thereby providing additional assistance to senior renters.

ADDITIONAL INFORMATION WILL BE ADDED AS DEVELOPED.
YOUR COMMENTS ARE MOST WELCOME.

Visitor Comments:

Thomas F. Ludolff says :
I also believe it is unfair that people who own homes and have no children should shoulder the school funding while many who do not own property yet have several children attending school pay very little. I think there should be tuition also. So those with more children have to pay more.
Anonymous says :
people who rent land and pay monthly to live on it should not be responsible for paying tax on the land. That should be the land owners burden. Many municipalities still tax the renter on property that they rent and do NOT own.
Anonymous says :
we should either be taxed on money when we earn OR when we spend it, but not both. It is hard enough to make ends meet, but double taxation is taking it's toll on all of us.

This site uses .PDF files for ease of viewing and printing. You will need to have the free Adobe Reader installed on your computer to view .PDF files properly. If you don't already have it you may get the free Adobe Reader by clicking on the image below.

Get the FREE Adobe Reader here!

~ ÷ ~
S.T.O.P. web hosting and services proudly sponsored by BanPro NET, a Pittsburgh, Pennsylvania Business.
Please report any problems you have with viewing or navigating this website to C_Miller@GrandOldUSA.com
XML Sitemap

S.T.O.P. Primary Residence Protection Plan

Current Petition Signatures Total: 118,369


  Top of Page