Redstate

This is just Prop 13 in PA. People should study the impact of prop 13 in Caliphornia before they implement it in PA. It will have the same ill effects, concentrating all power in Harrisburg and leaving the municipalities with unfunded mandates. It will make the commonwealth even more of an elder-magnet and repel the young. It will drive up housing prices and create excess unused housing. Dumb idea all around.

percentage increases in housing prices in the vicinity of 10-15% anually, along with corresponding increases in property tax assessments now?  

The only point in studying any proposition in CA is too see how stupid liberals really are. Of course prop 13 created a problem: government apparatchiks ignored the expressed will of the people and didn't reign in their unecessary spending. Now they scream there's no money for the schools because instead of funding things in the correct order (fire & police, then schools, then social programs) the fund in reverse.

While I might pick some nits here or there with the proposal, overall I think its a sound basis. In a given region property turns over more frequently than people think, so the revenues will likely always be increasing anyway. It's certainly better than any of the other "property owner protection" schemes I've seen elsewhere. Here in the People's Republic just outside out capital, there's a nominal state law that says your property taxes can only go up 10% per annum if you've been in your house for more than a year since the last assessment. Of course that doesn't actually mean when you paid your first mortgage payment or moved in, it means when the lawyers filed the deed with courts. My roomate bought a house a couple years ago and got serious sticker shock when the tax bill came. A 30% increase in the tax valuation, and because the lawyers took their time filing the deed, no 10% max on the tax bill, even though we'd moved in 13 months before.

The problem is not just that the politicians defund what people want first, it is that moving from the property tax to the income tax increases the volatility of the states revenue flow. In the flush years the state increases entitlements to buy votes. In the lean ones, the dip is much worse than it would be on a property tax basis and the cuts are much deeper in the "dioscretionary" portions of the budget.

Prop 13 also does reduce property turnover. Instead of moving into a larger house, people do an add-on so that the assessment goes up only by the "estimated" cost of construction. And those who might downsize remain in oversize houses to avoid an increase in property tax.

The problem is indeed overspending by the politicians. This proposal does nothing to address that issue. That shows why the conservatives were really stupid with Prop 13. What spending reductions it achieved came primarily by reducing the quality of the California public schools, once the best in the nation, to the level of Mississippi's. If that's what Pennsyltuckians want, they should say so.

If the assessed base is rising, the tax rate can be reduced if spending is controlled. The solution to the problem is to elect legislators at the municipal l;evel who will control spending. Instead of doing that, the people elect big spenders and implementing tax measures like these in the hopethat it will control the big spenders, but it won't. It will only transfer power and control from the municipalities to the commonwealth. And that will not result in better spending or taxing.

level with you: here in SE PA, the overwhelming majority of voters are enamored of public spending primarily because they identify it with their public schools, which they regard in large part as the bulwark of their escalating property values - which, in turn, they regard as the basis of their future prosperity, whether as speculators or in retirement.  They will weep, wail, and gnash their teeth over the increase in tax assessments, but any public official who proposes legitimate spending reductions will more likely than not be ejected from office almost prior to the conclusion of balloting in the next election.

Yes, this is an incoherent set of fiscal/political desires.  Haven't many members of the electorate always inclined towards this sort of incoherence, even hypocrisy?  

I freely concede that my position is entirely self-interested: when surrounded by stupid people, I wish for public policy that will enable me to isolate myself, to a greater degree than is now possible, from the consequences of their stupidity; and that is why I support the property-tax reform measure, which will afford me the luxury of achieving just that.  For people such as myself, this is the least-bad option.

From Swann's speech Monday:

"Already the attacks have begun.  And there will be no louder roar against these reforms than that of Ed Rendell.  That's because Ed Rendell is not a reformer.

 

"But I can hear it already.  Ed Rendell's campaign wants you to believe that my proposals include measures similar to those of Proposition 13 in California.  So, let's talk about that.

"California went through a revolution in 1978.  After decades of significant and arbitrary property tax hikes, Californians passed sweeping reforms aimed at stabilizing rates.

"Following the passage of Prop 13, California outpaced every state in the nation in economic growth, income growth, and even in real estate appreciation values.  Government revenues grew sharply, and Californians had more of their own money to spend.

"Now, California in the 1970s didn't get everything right.   They took no steps to control the sharp rise in state government spending, which was the result of increased government programs and significant increases in the number of government employees.

"But unlike California in the 1970's, I have a vision for a Pennsylvania of tomorrow that prepares for new challenges by reining in government spending and reducing the size of government.

Nice try, though.

why do they have to implement property tax control? Property taxes are at the municipal level, not the commonwealth. Swann will have no control over municipal spending, only taxation. When the municipal tax proves insufficient to fund operations, the commonwealth will step in and take control of local programs. It will transfer power to Harrisburg.

I also lived in California for 25 years. I fail to see how destroying the Pennsylvania school systems by passing control of them to Harrisburg will insulate you from the consequences of the stupidity of others. They're still going to spend as much and tax as much. They're just going to shift it from the wealthy elderly to the struggling young by taxing income instead of wealth. It is a mistake that has consequences that take decades to emerge.

The local governments are already quite capable of ruining them, as they have in many instances.  And as I stated, the people want their schools, whether the reputations of those schools are warranted or not, lavishly funded, because that enhances their residential property values.  Either way, money will be wasted; the benefit of the switch to income taxation may well be that it is felt as keenly as the property tax, but not tied to something, namely, the school system, for which many people have a superstitious reverence.  In other words, I am willing to gamble that this will prove a surer path to the starvation of the beast.

My SE Pennsylvania sense says its a good idea. I know what the problems with the school systems there were, and they had nothing to do with funding levels.

Where I lived we had moderate taxes and my high school still managed to have an olympic length swimming pool and a planetarium. But I do remember some of my teachers who obviously suffered from tenuritis, including the president of the local teachers union, who was possibly the worst science teacher (I loved science and rarely had a science teacher I didn't like) in the high school. Fortunately, there weren'too many of them (although in the second grade my brother had the worst one in the entire county).

I remember the parting conversation I had with my favorite math teacher (and that alone marks him as one of the best teachers in the district since arithmatic and I didn't get along) after graduation. He left for an administrative position that same year, partially because he had kids who were headed to college and he needed the money, but even more because the teaching process itself had become a manufacturing job: for most of his classes the names and faces might change, but the personalities and problems were interchangeable from year to year to year. Coupled with the growing sense he had that the public schools were simply being used as day care warehousing locations with no sense of the adventure and work of learning.

where do you hail from? I grew up in South Lebanon Township. Probably the best 21 years of my life. State College was a close second, but it still wasn't home.

How very very odd. The last statistics I saw on income taxes is that they vary between 17 and 22% of GDP regardless of the actual marginal tax rates. Which means that if what you said were true, what that implies is that in lean years taxpayers who could probably use their money better than the government can, have to shoulder a higher percentage of the recession/depression burden, because the government take is fixed. Seems to me that even Keynes thought that should be reversed.

government, regardless of the condition of the economy. Your 17-22% refers to the federal income tax. And that represents a 25% fluctuation from bottom to top. That's a big swing. Other than that, your point is not clear to me.

native of Bucks County, but moved to Montgomery County in 1994.  Bucks County, in my lifetime, has been transmogrified from a beautiful county in which  only the lower fifth was suburban sprawl, and which had a distinctive local way of life, to one in which the lower half is sprawl, with the rest steadily following, in a mad rush to replicate the New Jersey effect we called "The Wasteland" growing up.  

And you should see - if you can stomach it - how sprawl is ruining Lancaster County, as well.

Even considering the hideous sprawl and the blue-state political culture, I find it difficult to imagine living elsewhere.

Your earlier point was that government revenue from income taxes is variable up or down. If one assumes that government revenue is down and the income tax rates haven't changed, that means that the level of income from employment is down. Now if the tax rate from property either remains fixed or increases because property values have be evaluated higher, but the taxpayer has less income, that means that a larger percentage of his income is being spent on the local government. In my moral philosophy, the government should not be above the economic forces which taxpayers experience. But even if you move to a Keynsian perspective, in lean years government should borrow money to pump up the economy rather than raising the percentage of income a taxpayer must send to the government, which has a depressive effect on an already depressed (whether only to recession or an actual depression) economy. A negative reinforcing effect which a prudent (or politic in the original sense of the word) person would avoid.

when I was growing up. :)

I don't often make a point of going through there when I go home to visit my folks, but I know what you mean. Growing up ours was one of about seven houses on our side of the block. The block of course measuring about two and half miles on one side by one and a half on the other. Farms on either side of us that grew corn through the summer. Our farm neighbors on the one side had a vegetable stand in the summer, and we'd watch for the tractor to pull up to unload the sweet corn, then go across to get it while it was fresh. Nobody manned the stand, just a coffee can and prices on the tomatos or corn. Put your money in the can and make change if you needed to. Now there's a convenience store, a car wash and a bank at the intersection with the red light right up from my home. Even though we had to drive a bit farther when I was growing up, it was more peaceful. Granted, it should have been a redlight and not a stop sign at that intersection when I was growing up, but the new commercial ventures are a little jarring. At least the farmers are still there. They've moved back a little ways as the children of the farmers have built their homes on the farm land, but it is still more rural than living down here in metropolitan DC.

in bad economic times, I'd agree.

The actual plan is basically the same. The difference being the Governor's "visions of reining in spending and reducing the size of government." I imagine there were quite a few people in California in '78 that also had "visions of reining in spending and reducing the size of government" as well.

There is nothing particularly fair in the long run about basing assessments on the purchase price of the property. It will still end up being a transfer of wealth from older generations to younger generations, whether spending is controlled or not. There is no reason to build this wealth transfer into the tax code.

are the result of spending decisions, not taxing ones. Income tax just as assuredly transfers money from older to younger people for purposes of schooling. Likewise, Social Security just as assuredly transfers wealth from those older than 14 and under 62 years of age to those over 65 years of age, with the 62-65 range being dependent on whether you retire or not.

As far as property taxes are concerned, they were one of the forms considered legitimate by the founding fathers, while the taxing of income was sufficiently frowned upon for the Supreme Court to strike down its first implementation as unconstitutional. The other primary forms would have been import fees and sales taxes.