Lynn Swann promised to reveal a comprehensive property tax reform package and darned if he didn't deliver.
In a speech Monday in Harrisburg, he trotted out his proposal, a complicated affair that would (to oversimplify) do two things:
* Give taxpayers immediate relief by dipping into the state's projected revenue surplus to give them partial rebates on their property taxes.
* Give taxpayers long-term relief by substituting the current property tax system with one that, in effect, freezes taxes until a home changes hands.
Here's a Post-Gazette story on the plan. Here's a day-after piece that AP did. And, if you want to get into the nitty gritty, here is the Swann campaign outline of the proposal.
Swann's idea has a pie-in-the-sky aspect to it, because it would require amending the state Constitution. To do that, the proposed amendment must pass two consecutive sessions of the legislature, then be approved by the voters in a referendum. In the words, the earliest it could go on the ballot is sometime in 2009.
The most radical part of the Swann plan would be to shift the way property taxes are levied: from one based on the market value of a home to one based on the purchase price of a home.
I can explain it thusly:
If you buy a home for $250,000 under the plan, you will pay one to two percent of the purchase price (to use the 2% rate, $5,000) in taxes each year, but the total won't change much at all.
In a sense, it caps property taxes for owners of existing homes, ala California's Proposition 13.
What stands in the way of Swann's proposal becoming law? The Constitution's uniformity clause, which forbids tax rates from varying among the same class of taxpayers. (It's why we have a flat income tax, instead of a graduated one.)
The uniformity clause will have to be amended because the Swann plan will result in wide variations in property taxes paid.
Example: Suppose you bought your house 20 years ago for $70,000. Your property tax -- under the Swann plan -- would be $1,400 a year (using the 2% rate as an example.)
Suppose you sell your house for $300,000. The new owners will pay 2% of his purchase price, in this case $6,000 a year in property taxes.
In other words, you'll have blocks of identical houses where one (longterm) owner will pay a fraction of what other (newer) owners pay.
Depending upon your point of view, the tax is either a great deal (for long-time homeowners) or inequitable and unfair (for recent buyers).
Swann's plan also would cap local spending on schools to an annual increase of 3%, thus reducing the pressure to increase taxes.
Will it ever fly? Probably not. But, it does give Swann the right to say: "I have a plan that will reduce property taxes" and that serves his needs for now.