DR. MARK W. HENDRICKSON

Time to abolish antiquated property tax

By DR. MARK W. HENDRICKSON | Tuesday, July 10, 2007

Property taxes in Pennsylvania appear locked into a long-term uptrend. In recent years, there have been huge increases in the portion of the property tax that finances county government. County officials have levied these increases to pay for the unfunded mandates imposed by the state government in Harrisburg . The largest share of the property tax funds the public school districts, and virtually nobody foresees a time when the expenditures of those districts will stop rising. These ongoing pressures for additional tax revenues raise the question: Is it politically and economically feasible to continue raising property taxes in the coming years?

Some might look at the results of a recent ballot proposal in Lawrence County and conclude that Pennsylvanians prefer a property tax over others types of taxes, but this conclusion is unwarranted. When offered the opportunity to receive a modest reduction in the public-school portion of their property tax in exchange for a 1 percent increase in their earned income tax, voters in every school district in the county overwhelmingly voted against it. The context here is crucial. Voters were not opposed to property tax relief, but to a package deal that represented an overall tax increase.

We have a political stalemate in Pennsylvania, because Harrisburg has mandated that the only permissible reform to public-school funding must be structured like the Lawrence County proposals. The psychology is all wrong. It's hard for voters to get excited about a proposal that makes an obnoxious, already-high tax just a little less high (i.e., the property tax) at the price of ratcheting up another obnoxious tax -- the income tax -- when the federal/state/local taking of income is already at an uncomfortable level. If Harrisburg really wants reform, it needs to emulate the boldness of the Michigan government in the 1990s, when it totally scrapped the property tax for school funding, and replaced it with a 2 percent hike in the state sales tax. I suspect that Pennsylvania voters would be far more comfortable with an increase in one type of taxation if it were offset by the complete removal of another type of taxation. If you give Pennsylvania voters the chance to eliminate one part of their tax bill completely, then tax reform has a fighting chance for approval.

The larger, more fundamental problem here is the property tax itself. This form of taxation is totally antiquated, appropriate in America's 19th-century agrarian society, but out of place today. In the 1800s, when there was no income tax and it was considered none of the government's business how much money anybody made, the property tax served as a proxy for one's income. This made a lot of sense then, because it was logical to assume that the citizen farming 80 acres had a higher income than one farming only 40 acres. Today, though, the homesteads of most Americans are not their source of income, but merely where they live. Why, then, take more money from a citizen with a house of 1,500 square feet than one with 900? One of the elementary principles of prudent taxation is that, in order to avoid harming citizens, taxes should take into consideration the individual's ability to pay. Today, one's ability to pay depends far more on one's income than on the size of one's house. To continue taxing people as if their house were generating their income is absurd.

An additional fault of the property tax is that it can jeopardize home ownership. On the surface, it appears that once a person has paid off the mortgage on his house, then he owns it free and clear, but this is not so. If the homeowner falls on hard times and can't pay his property taxes, the sheriff comes and confiscates the house. Under the present system, a person doesn't really "own" his home completely, but in effect rents it from the local government which permits him to keep it only so long as the "owner" continues to pay taxes on it. We have heard of senior citizens -- wonderful, law-abiding citizens who worked hard for decades to buy their own home -- having to sell their home because they couldn't afford the taxes. This is abominable. And how many of America's homeless persons became so because they fell on hard times and were evicted from their homes because they couldn't pay their property tax?

In an era when it has been the federal government's policy to facilitate home ownership as a central feature of "the American dream," it is anomalous for local governments to make it difficult for some citizens to keep their homes. The property tax is outmoded, unfair, irrational and destructive. It's time to abolish it.

Dr. Mark W. Hendrickson is a faculty member, economist, and contributing scholar with the Center for Vision and Values at Grove City College.

Original Article source: TheTandD.com

Visitor Comments:

Carl F. Miller says :
Dear Dr. Hendrickson:

Thank you for your very informative article regarding the issue of property taxes in Pennsylvania. While your erudite comments are indeed right on target, they've been said and said hundreds of times on the STOP webpages. Nevertheless, I thank you for saying them again!

Mr. Bob Logue, founder of STOP, and a former KDKA radio talk show host has been saying the exact things since 2002, and I agree with him when he states "The politicians in Harrisburg simply don't give a damn." If they did, it would be a simple matter for them to simply impose an immediate "moratorium" on all sales of a citizen's residence because of delinquent property taxes. You may wish to contact your representatives and ask them why they are fiddling while we burn. And while you are asking, please remember that the "teacher's union" in Pennsylvnia is a major contributor to the political campaigns of many of these politicians. If we are ever going to enjoy open and honest government, the first thing we must do is elect people who will rid this Commonwealth of the "lobbying" forces strangling us with their self interests. "Few politicians have virtue to withstand the highest bidder." I believe we have in Pennsylvania, "the best group of politicians money can buy."

Another thing we must do, is rid ourselves of the dolts who win elections; I prefer to characterize those elections as nothing more than "popularity contests in which too many of the participants are as dumb as Ned the First Reader." How we might accomplish that is anyone's guess, but my guess would be to administer a test to every person of age who desires to vote. "Anyone permitted to vote, should at least be expected to know how to spell a candidate's name." But, as I'm sure you have heard "Politics is perhaps the only profession for which no preparation is needed."

Yuor comment regarding "ability to pay", is right on also. For your information, I reside in Westmoreland County, Pennsylvania and I recently presented the indentical claim to one of my county commissioners. Want to know his erudite response? He said to me "I don't know who can pay or who can't pay their property taxes---we treat everyone the same." Now there's wisdom for you! But, here again, he was elected by the people, right?

Since you may be in a position to research the issues, I would like to proffer a few to you. I've already proffered them to every member of the Pennsylvania General Assembly, but "NONE" have ever responded. Hopefully you will.

First question: Are public schools, public uses?

Second question: If public schools are public uses (which obviously they are), then how can any state, county, municipality, or tax claim bureau, supposedly acting under the Real Estate Tax Sale Law of 1947, confiscate a citizens's property for public use without "first" paying just compensation to that citizen? And again, I urge you to ask your elected representatives those same questions. Not that you will ever receive an answer from them.

Another question I urge you to ask, is one of a supervisor in your county tax claim bureau; it's this:

By what authority does he or she threaten a citizen who is delinquent in paying property taxes, with the command that the only forms of payment the tax claim bureau will accept are cash or certified funds? But before you do ask that question, I encourage you to read what the Pennsylvania courts have already said about the matter. You can find out what the court said by simply typing in your browser: Pentlong v. GLS Capital. That case should have settled the matter once and for all, but your local yokels in the tax claim bureau apparently can't read, or if they can, they simply continue to ignore what the courts have said. I prefer to think it's because of the former.

One of the most disturbing things for me in all this mess, is that, every time I confront any of these bureauRATS with these questions; they always respond by saying "That's the law." This stupidity makes me sick! You should see the stupid look on their faces when I respond by saying "Yes, and there was a law (and one which they probably would not dispute, because, as they say, it was the law) in Alabama several years ago which prohibited African Americans from riding in the front seats of public buses." I then say to them; and if Rosa Parks had harbored the same cowardly inhibitions as you (the bureauRATS) African Americans would still be riding in the back of the buses! But, I must tell you, I don't think they (the bureauRATS) have the slightest idea of what I'm talking about!

Sir, I learned long ago that there is nothing more dangerous than active ignorance. And in my learning, I've always wondered why, if ignorance is bliss, why there aren't more happy people in the world.

Dear Doctor, please favor me with your insights into my remarks. If perhaps you may have reached this point in my message, you no doubt may have concluded that I am nothing more than another radical. But I sincerely hope not! Many members of society are always ready to pounce on any man who puts a worm in their soup!

Again, thanks for your very important message; I trust that you will continue to post them on the STOP website.

Respectfully yours,

Carl F. Miller





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