New Bill Would Replace Pennsylvania School Property Taxes

In Pennsylvania, State Rep. Frank Ryan, R-Lebanon County plans to introduce HB13 later next month in the hopes to end the controversy over the school district portion of property taxes. HB13 would be a revenue-neutral replacement of local property tax dollars in the form of a personal income tax and local sales tax. Both of these new taxes would go to districts within the county.

What is the proposal?

Rep. Frank Ryan is calling for a 1.85% local personal income tax and a 2% local sales tax on top of the state sales tax rate. Instead of this revenue going to the state, it would remain within the county. This last year, over $15 billion has been raised in the form of property taxes and Rep. Ryan says this would be a revenue-neutral program. He also is proposing a 4.92% retirement income tax (excluding social security). With this tax, only 1.85% of the revenue from retirees would go to school districts.

With Pennsylvania school property taxes being some of the highest in the nation, there has been a call to help shake up the system. Within the bill, there is a “hold harmless” provision which means every school district is guaranteed to receive no less in revenue than under the previous system. If there is a gap, the state would make up the difference in tax revenue. There is a definite argument on both sides for this new bill and it will be interesting to see how the bill progresses.