Tax commission meeting tonight was VERY informative. Three members of the general public , the tax commission members (minus one who was ill - 8 total), a table of four(?) area tax collectors (they were very good, and had a lot of good information), and the school board was well represented (maybe only two or so who couldn't make it).
During the public hearing portion (before the regular meeting) a presentation was given by Mr. Scott Shearer of Public Financial Management Inc. who presented various scenarios as to how much money would be "shifted", (handouts were presented, will try to get them posted), but here it is in a nutshell:
The tax commission had the choice to either raise the earned income tax (EIT) or the personal income tax (PIT) to offset any reduction in property taxes through the homestead (or farmstead) exclusions. The four scenarios they considered were:
- Raise EIT by 0.90% with an estimated property tax reduction of $694
- Raise EIT by 1.50% with an estimated property tax reduction of $1157
- Raise PIT by 0.8% for an estimated property tax reduction of $670
- Raise PIT by 1.4% for an esitmated property tax reduction of $1173
Renters get the short end of the stick, no matter how you look at it. They would be forced to pay more either through an EIT or PIT increase, yet see no reduction in property taxes (because they don't directly pay those).
Basically, the homestead exclusion is currently estimated to be approximately $694/year. This comes from the average assessed (not market) value of homes in the NASD of $64,400. Everyone who qualifies would see a reduction of the $694/year (unless they paid less than that in property taxes, in which case they would get all their money back, no more). This value can (and will) fluctuate year to year depending on the average assessed value of the tax base, gambling revenue, etc., etc..
A chart was given as to how much you'd pay based on your annual income. Break even point is just over $75K/year. Anyone making more than that will see a net increase in taxes, and anyone below that will see a net reduction in taxes.
There was a good deal of discussion about how the taxes would be collected. If the commission recommended a PIT, there currently is no means to collect that. Would there be an additional level of collection? A lot of unanswered questions with switching to a PIT. Some questioned what's the difference between PIT and EIT. Basically it boils down to this:
- EIT - Taxable income includes salary, tips, commissions
- PIT - All of the above + interest, dividends, income from S-corps, lottery winnings, etc.
At the meeting, the commission recommended increasing the EIT by 0.9% and would present that non-binding recommendation to the NASD board at the next meeting (Monday - 11/20 7:30PM).
Some interesting tidbits to come out. Currently, it is estimated that 20% of the tax base is renters. Also, if they recommended the 0.9% increase in EIT, it was estimated that 69% of the district would benefit in terms of a net reduction in taxes.
All of this could be moot, because once the board decides to accept the recommendation this issue will go before the general public in the form of a referendum in May and could be voted up/down. If it gets voted down, we stick with the current tax structure.
A critical issue with many questions remaining. Thanks again to Brad for the email as well as the two other member of the public who attended. So what do you think? Is shifting off property tax to Earned Income Tax a more fair means of taxing? Will this relieve the burden placed on those with fixed incomes? Is it fair to renters who don't directly pay property tax (but have it incorporated into the rent they pay the property owner)? Can a change in tax structure pass the referendum (where in essence anyone earning over $75,000 will be voting to increase their own taxes)?
9 comments:
I was in attendance with Brad last night.
He's much better at posting the goings-on of the meetings than I am.
I'd like to make one very blunt comment -- people have an obligation, in my mind, to attend these meetings. All too often, taxpayers in general will complain about their taxes or the local government, school board etc., but will do nothing to get informed and involved.
We have been making it a point to be at these meetings to gather information (to pass along to friends, family and neighbors) so we know the truth and not just the rumors. Also, we can have a voice at these meetings. That's why the sunshine law exists. We have the right and duty, in my mind again, to question and challenge our elected officials.
We, as a community, should be questioning the school board as to why we need a swimming pool to service a very small minority of our population when our PSSA scores are in the middle of the pack. Improve the test scores and we'll talk about a luxury like a pool.
I know that many people feel this way, so go to the board meetings (next one is Monday, 11/20) and have your voice heard. If the board sees the public opinion being spelled out in front of them, maybe they'll realize that they serve the public, not themselves.
Scott
Agreed!!!!
This goes straight to the reason this site was put together - sharing information.
As you note most general public meetings will have an audience of maybe a dozen, committees and commissions - three or four tops.
Then an issue arises and the numbers swell. A vote is made or deadline passes and numbers return to 'normal'.
Over time officials and administrators have come to expect this and as a result they know that they can 'wait out' the crowd.
What this type of site does is allow the three or four who are there to share the information with everyone and keep it on the front-burner, in the public dialog.
Everyone's time is tight, that is why so few attend meetings (and I respect that we each decide how to spend it) and so many local elections feature uncontested races or seats go unfilled.
As an example the borough is desperately trying to fill vacancies on several commissions - as of the last meeting there were two applicants for a total of six different positions (if my memory serves correct).
It is important to have people at these meetings. As many of the committee meetings as possible should be attended. There are many that take place monthly and I'd bet most go unnoticed.
If you attend them, send me a note and I'll post it on this site. I can do so anonymously or credit you by name - your call.
I think Brad, Scott and all the others who attend these meetings are doing as great a public service as the people running the meetings.
Thanks again!
One point to make clear about renters. Landlords of rental properties would not receive the homestead exclusion so their property taxes would remain unchanged. However, their EIT would go up so they would undboubtedly pass this along to the renters who would be paying increased rent in addition to their own increased EIT.
Thx for the update on a very important topic but wanted to note that the .9% EIT increase would represent a 75% increase over the existing 1.2% EIT. My opinion is we are penalizing renters to protect fixed income property owners and tax shifts seem shady to me. It would be interesting to know how many members on the school board and tax commission are landlords as this is a sweet deal for them and as always personal agendas rule the roost. But at least the public will get to vote on this one...
OOPS scratch that last part-just read the previous note-great to know there is provision to protect landlords double dipping it
Most of these types of exemptions on property tax are on a homestead basis, meaning only your primary place of residence.
Therefore not only are landlords not exempt, but neither are businesses.
I Feel A tax based on income is a fair way to go. Lets face it, most raises that are given are a percentage of your current wage. I haven't figured out how to work around those who rent but they don't have the added expense of maintenace of a home, homeowners insurance and alot of times have some utilities included in their rent. I know that I as a full time worker who isn't allowed any overtime is basically on a fixed income and when I get a raise it usually is about thirty cents more an hour. The yearly raise I receive doesn't cover all the increases in taxes, utilities, gas, food ect...so there for I too basically live on a fixed income. My mortgage is about what I would pay to rent a place but when you add the property taxes and homeowners insurance it is almost equal to what my mortgage is so basically it cost me twice as much than it does someone who rents and none of my utilities are included in my mortgage. Maybe what could be done is to charge a lower tax base for someone who rents. When I hear about how much they want to raise the tax a year now I cringe because it is one weeks net pay for me and I really can't spare another weeks income in taxes.
There was a time when owning property meant you were affluent. It was those individuals who were then identified to pay these taxes. Today, I don't think you can say that owning a home indicates your ability to earn income and thereby pay a tax.
Take a look at seniors. Many have lived in the same home for forty or more years. They have been retired for twenty. The house has been paid off and they are now on a fixed income, but every expense goes up and so does the tax both because the taxes go up and because the value of the home has increased over time.
If you are working and this goes through you will most likely pay more, but if you plan to stay here, when you retire you will pay less.
Regarding renters, I don't see why they shouldn't pay the school tax like a homeowner. You can say the cost is built into rent, but the portion of property tax for a single unit would have to be fairly insignificant. When you consider the fact that the current budget states the cost per student will exceed $11,000 in 2006/07, I think everyone with an ability to pay ought to.
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