Monday, June 12, 2006

Rubik's Cube


Now, it is the House Republicans turn to solve the Rubik's Cube of property tax reform.

GOP House members last month rejected a proposed compromise worked out between Gov. Rendell and the state Senate.

Word is that the House is mulling (I love it when they mull) a proposal that would increase the state sales tax from 6% to 6.5% to raise about $650 million that, in combination with slots revenues, would go towards lowering property taxes. The Patriot News has a piece on it today.

Is there any reason to think this plan will succeed where others have failed? You got me.

After the primary, I sent my crystal ball into the shop for some much-needed repairs.

Two quick notes, though:

1) If the plan calls for an increase in state taxes (in this case, a 12% increase in the sales tax) it's not the best timing, this being an election year with so many incumbents jittery over voter anger.

2) How can Harrisburg justify increasing taxes when the state has a huge surplus, which currently amounts to $722 million?

FYI: Rendell has a plan to spend some of that surplus (a mix of tax cuts, new spending and socking some of it away in the state' Rainy Day Fund.)

At its base, I think there's a disconnect between policymakers' and regular folks' understanding of what constitutes "property tax reform."

The policymakers see it as tax redistribution -- lower property taxes but keep the size of the pie the same or even make it bigger by raising some other tax (sales tax, local income tax?) or finding new revenue (from slots, etc.)

Voters tend to see it -- simply and plainly -- as tax reduction. They are happy to have their taxes property taxes cut, but what makes anyone think they like the idea of having other taxes raised to make up for the lost money?

14 Comments:

Anonymous CENTRIST said...

But you left out the third alternative:

Cut spending while rearranging the tax pie.

Start the cutting in the General Assembly. Eliminate the frivilous spending waste like Fumo and Perzel spending tax dollars for PR firms! (An outrage!)

Eliminate WAMS.

Cut per diems to the bone!

Cut the size of the House.

And start paying these part time (77 days per year) politicians a pro-rated salary based on their now annual pay.

Eliminate Car allowances.

Cut the size of legislative and caucus staffs to the bone!

Reduce extra pay for committee leadership and chamber leadership to a maximum $2000 per session.

Put term limits on leadership positions, including committee chairmanships!

And when Representative Cohen comes here to comment that such "Draconian measures" would invite every Tom Dick and Harry to become Representatives and Senators, thus reducing the governing capabilities of the elected body, I would counter that it is exacly those folks who the Founders and Framers had in mind to "conduct the people's business", and they certainly could not bollux things up as much as our current crop.

Oh, and no more book buying on the tax payer's dime.

10:10 AM  
Anonymous cat17pealer said...

You made an error when you said slots revenue is new revenue. It is a tax on the stupid and merely a redistribution of wealth.

11:59 AM  
Anonymous phillydem said...

The fact is, even doing everything you suggest, it's a pittance in a multi-billion dollar state budget.
If you're ideas saved 12M, 24M, 36M or even 1.20B/year, that's only $100/yr for every Pennsylvanian.

And, let's face it, that WAM money would have to be replaced by other sources of money like increased state funding for specific budget programs or state grants or local tax increases.

12:06 PM  
Anonymous CENTRIST said...

I said:

"Start the cutting in the General Assembly."

It's the perfect place to start.

Once they are done cutting there, the legislators will be more than willing to cut elsewhere. 8>)#

Where are the Reform Democrats?

12:24 PM  
Anonymous Anonymous said...

Right on, phillydem. Centrist, you are completely off the mark.

You talk as if state lawmakers are getting rich in their jobs...they're not.

You talk as if they're all only in it for the money...they're not.

You talk as if every perk they get is unneeded fluff and payola...it's not.

I'm a taxpayer, same as you. And I'm sick and tired of the attitude that "all politicians are crooks and every nickel we pay them is wasted." It's time to call bulls*** on that.

Some of them, maybe many, are incompetent nincompoops, I'll grant you that. And some are just flat-out nuts. But your prescription for cutting the legislative budget to the bone is equally insane.

We probably need more benefits and, yes, even a pay raise for our state elected officials. And it's not because they're necessarily worth it, but to attract candidates who will be worth it.
Make serving the people a full-time job, with a hugely attractive full-time salary, and they won't need to abuse perks or cozy up to big-money supporters.

At the same time, increase the penalties for abusing the system and make it ironclad. And then enforce it vigorously.

Of course, this is a pipedream and it will never happen in Pennsylvania. But it should.

Instead, we're likely to get something akin to what centrist suggests -- hopefully a little less drastic -- and the only people who will be attracted to run for state office will be left and right fringe candidates and true believers who will make Harrisburg even more of an asylum than it is today.

1:18 PM  
Blogger AJ Lynch said...

Tom:
Here is my suggestion for "property tax reform". The state should enact an income tax that will provide every stinking district (rich and poor) with let's say $5,000 per student per year and the district can pass on that new cash stream to its residents by lowering district property taxes.

This keeps the issue "local" and schools should be a local issue. AND the district becomes much more accountable for budget discipline and accountable to its own residents (no more blaming the state)

I am curious, what would you recommend?

2:30 PM  
Anonymous phillydem said...

Don't know about, Tom, but I like the idea.

IMO, there is something to be said for a set, basic level of state funding for each school district and then letting the "locals" decide how much they want to pay for "extras".

FYI, over at Keystonecampaigns.com they are holding a contest and seeking policy proposals (200 words or less) for state goverment. Your idea would be an excellent submission in my view.

5:29 PM  
Anonymous Anonymous said...

Centrist,

I like your ideas but am not sure how big of a dent they'll make in the overall budget.

I'd go further to include a ballot initiative to shrink the size of the legislature by at least 30%.

5:30 PM  
Anonymous CENTRIST said...

Anonymous 2: It would take a Constitutional Amendment to change the size of the legislature.

Anonymous 1: Are you sure you are not John Perzel?

7:55 PM  
Anonymous Anonymous said...

Would raising the state sales tax also provide relief to Philadelphians or would it be yet another tax on top of all the other taxes our wonderful elected city officials have already wallopped us with?

10:27 PM  
Anonymous CENTRIST said...

Raising the state sales tax is shifting the burden from property owners to everyone. Everyone pays sales and use taxes (SUT). However, this hits low income folks the hardest.

Best plan I've seen is for the state sales tax to go down to 5%, while being expanded to include items not now covered (excluding food, clothing, etc. -- necessities), and raising the corporate income tax, and stripping out some of the tax exclusions that are effectively corporate welfare, and raising the state income tax, and making it graduated like the federal, though not as complex. [In other words, make the income tax scaled like this:

Under $20,000 = none
$20,000-$50,000/year = roll back to 2.5%.

$50,000-$100,00 = 4%

over $100,000 = 6%

That's all gross income.

Spreading the SUT tax out will allow for changes in the economy.

So will the Corporate Income Taxes.

In down years, schools are simply going to have to get by. In up years they should create a rainy day fund for down years. (That ought to be mandatory!).

Sadly, what Piccola and Conti presented yesterday was a joke...nothing more than the same old wolf (ACT 72) in a different sheep's clothing!

12:43 PM  
Anonymous phillydem said...

Interesting ideas, centrist. You'd need a constitutional amendment though for the graduated income tax because of the "uniformity" clause in it.

Agree about the corporate income tax as well. It's a joke to have a 9% rate that practically no businesses pay.

1:59 PM  
Anonymous CENTRIST said...

Thanks Phillydem! Nice to know we can agree on some things.

Constitutional amendment is correct. There are several needed.

A new one should draw the lines on legislator expenses, and spending.

Another should clearly outline lobbying rules.

There are more, but let's take this a little bit at a time.

7:27 PM  
Blogger Jim in West Chester said...

Dear Anonymous ...
You can't have it both ways. It is TOTALLY ILLOGICAL to state that our current crop of elected officials aren't in it for the money and then turn around and say we need to raise their salary to attract better people. If they're NOT in it for the money, why would more money attract them?

And just how much do you think we'd need to pay the likes of Fumo and Perzel before they stopped lining their pockets with PECO $$$ and $5K PR payments?

11:33 PM  

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