Understanding the Nov. 7 Ballot Question and What It Could Mean to You

By Sen. Michele Brooks

My goal in this piece is neither to persuade or dissuade, but to inform.

On Nov. 7, Pennsylvania voters will be asked to consider a proposed constitutional amendment to permit the General Assembly to enact legislation to expand the homestead exclusion.  Many assume that voter approval of this referendum on Election Day will automatically eliminate all property taxes; however, this is not accurate.

But what it will lead to is a major policy question about how Pennsylvania's schools will be funded for years to come.

If the question is approved by voters, it is a step toward shifting property taxes to a whole new taxing system. Under the current proposal, the approximately $13 billion in revenue generated each year by the school property tax would be raised instead by increasing the sales tax and personal income tax, as well as broadening the items and services subject to the sales tax.    

Yet, possible sales and income tax hikes are not mentioned in the referendum question, which reads as follows:  

Shall the Pennsylvania Constitution be amended to permit the General Assembly to enact legislation authorizing local taxing authorities to exclude from taxation up to 100 percent of the assessed value of each homestead property within a local taxing jurisdiction, rather than limit the exclusion to one-half of the median assessed value of all homestead property, which is the existing law?

Under the current proposal, this tax shift would be accomplished by increasing the personal income tax from 3.07 percent to 4.95 percent, and the sales tax from 6 percent to 7 percent.  The base of items subject to the sales tax would expand as well.   

Under the personal income tax hike proposed, assuming the rate jumped from 3.07 percent to 4.95 percent, the new taxing system could look as follows:

A household making an annual salary of

  • $35,000           would pay approximately $658 more than what they currently pay

  • $50,000           would pay approximately $940 more than what they currently pay

  • $60,000           would pay approximately $1,128 more than what they currently pay

  • $75,000           would pay approximately $1,410 more than what they currently pay.

A sales tax increase from 6 to 7 percent would also cost consumers more, depending on their spending habits.

The sales tax would also be expanded to such items as, but not limited to,  

  • food not on the WIC list,

  • clothing and shoes over $50

  • veterinary services

  • haircuts and salon services

  • funerals, caskets and vaults

  • towing services

  • movie admission

  • alcohol served at drinking establishments

  • horses

  • recreational and spectator sports

  • non-prescription medications

  • diapers and other personal hygiene items

  • day care

  • dry cleaning

  • trash collection

  • newspapers and magazines

  • flags

  • candy and gum

  • basic and premium cable TV

  • home health care

  • textbooks, and more.

Under the current proposal, not all property taxes will be fully eliminated. For example,   

  1. Property taxes levied by counties and municipalities would continue.

  1. If a school district has outstanding debt, it would still be permitted to levy property taxes to pay off that debt.

  2. The property tax referendum only applies to homesteads, meaning residences in which someone currently lives, but it does not eliminate property taxes on commercial properties.   

The question at the heart of the issue is this:  should property taxes fund our schools? On one side of the argument, some folks I've met with say, "No."

On the other side, some citizens I've talked with have expressed their opinion that, because there is a dollar-for-dollar match for school property taxes lost, wealthier school districts could receive the lion's share of revenue; therefore, inequities could endure between districts with a higher average household income, and more economically struggling areas. 

In addition, an economic downturn could affect consumer spending and thus erode the amount of sales tax revenue available for schools-which could lead to an even higher personal income tax rate.

Each household will be impacted differently: some may pay more; some may pay less.  So please apply these numbers to your own financial circumstances before heading to the polls.

In closing, all of these issues must be evaluated when the referendum is considered.  I encourage every voter to make their voices and views heard on Nov. 7, and remain engaged in the debate that will follow on the future of taxation in the Commonwealth.