Author Topic: PA to eliminate property taxes  (Read 6389 times)

Astro Camper

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PA to eliminate property taxes
« on: December 07, 2015, 01:00:53 PM »
PA is looking to eliminate property taxes and school taxes by raising income tax from 3.07 to 4.6 and sales tax by 1%. What do you think is better for MMM.

By the way, in PA you do not pay taxes on 401K withdraws (part that was contributed) so for retirement, it may be the only state that you pay near zero in taxes since you pay no taxes on food and clothing and can cross into Delaware for large item shopping which has no sales tax on anything.

Property taxes are crazy high in most states that have no income tax.

TheAnonOne

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Re: PA to eliminate property taxes
« Reply #1 on: December 07, 2015, 01:07:05 PM »
For MMM, this is good.

No taxes on withdrawls? GOOD
Taxes shifted to income and sales? GOOD

There is no downside to this for MMM. There is hardly a downside to this for regular folks either. Probably benefits those with large houses more so than apartment dwellers.

PhrugalPhan

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Re: PA to eliminate property taxes
« Reply #2 on: December 07, 2015, 01:27:18 PM »
PA also doesn't tax pensions.   Since my GF and I will have pensions in a few years, and at least for me I am trying to get my Roth portion of my 457 plan up to 50% (currently its about 35% Roth), my 457 plan withdrawals would only be taxed on a small % of the overall amount.    If this happens, PA will be *very* attractive for me to move there after RE.

Cassie

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Re: PA to eliminate property taxes
« Reply #3 on: December 07, 2015, 02:30:54 PM »
Nevada has no income tax & low property tax.

oldmannickels

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Re: PA to eliminate property taxes
« Reply #4 on: December 07, 2015, 02:38:13 PM »

Debts_of_Despair

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Re: PA to eliminate property taxes
« Reply #5 on: December 07, 2015, 03:00:02 PM »
Nevada has no income tax & low property tax.

NY has income tax and insanely high property taxes. :(

JLee

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Re: PA to eliminate property taxes
« Reply #6 on: December 07, 2015, 03:13:04 PM »
Nevada has no income tax & low property tax.

AZ too. :)

Nevada has no income tax & low property tax.

NY has income tax and insanely high property taxes. :(

NJ as well. I don't understand it -- tolls everywhere, absurd property tax, income tax, and somehow they have some of the worst roads (re: quality) I have ever driven on.

tipster350

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Re: PA to eliminate property taxes
« Reply #7 on: December 07, 2015, 03:14:47 PM »
What this would have done is put the tax burden completely on citizens instead of citizens and businesses. Businesses that currently pay property tax would not. In some cases the taxes from businesses contribute quite a bit to tax coffers.

Bearded Man

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Re: PA to eliminate property taxes
« Reply #8 on: December 07, 2015, 03:41:46 PM »
PA is looking to eliminate property taxes and school taxes by raising income tax from 3.07 to 4.6 and sales tax by 1%. What do you think is better for MMM.

By the way, in PA you do not pay taxes on 401K withdraws (part that was contributed) so for retirement, it may be the only state that you pay near zero in taxes since you pay no taxes on food and clothing and can cross into Delaware for large item shopping which has no sales tax on anything.

Property taxes are crazy high in most states that have no income tax.

States with high property taxes (like WA) are bad for rental properties IMO. You'd be better off moving to a state with income tax, but no property tax, no? Most of the rental income is shielded with expenses and other deductions, so it wouldn't provide much taxable income on paper, and you'd pay little or no property tax out of your gross income from the rentals.

Zaga

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Re: PA to eliminate property taxes
« Reply #9 on: December 07, 2015, 03:51:03 PM »
Would have been about a wash for us, increase in income tax would have been pretty close to what we currently pay in property tax.

I was more interested that they are looking at reforming the liquor laws.  About fucking time!  PA is in the dark ages compared to every other state in regards to alcohol laws!

Trimatty471

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Re: PA to eliminate property taxes
« Reply #10 on: December 07, 2015, 04:54:36 PM »

Eric

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Re: PA to eliminate property taxes
« Reply #11 on: December 07, 2015, 05:24:53 PM »
PA is looking to eliminate property taxes and school taxes by raising income tax from 3.07 to 4.6 and sales tax by 1%. What do you think is better for MMM.

I doubt MMM cares much.  He lives in Colorado, so this would have little effect on him.
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vern

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Re: PA to eliminate property taxes
« Reply #12 on: December 07, 2015, 09:23:21 PM »
I was more interested that they are looking at reforming the liquor laws.  About fucking time!  PA is in the dark ages compared to every other state in regards to alcohol laws!

Har!  Is it still illegal to buy a six pack of beer in Pa?
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Zaga

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Re: PA to eliminate property taxes
« Reply #13 on: December 08, 2015, 05:38:30 AM »
I was more interested that they are looking at reforming the liquor laws.  About fucking time!  PA is in the dark ages compared to every other state in regards to alcohol laws!

Har!  Is it still illegal to buy a six pack of beer in Pa?
I'm not sure, but I think there are places you can buy a 6 pack now.  I'm not a beer drinker, so I don't keep track.  Our local grocery store does have a beer section now though, big improvement!  What I really don't like is you can't order wine from out of state and have it shipped to you, like you can in every other state!

Astro Camper

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Re: PA to eliminate property taxes
« Reply #14 on: December 08, 2015, 06:19:46 AM »
The property tax reform is no longer in the mix as of today.

https://www.picpa.org/articles/legislative-update-article/2015/12/04/week-ending-dec.-4-2015#12041501

Damit. I was hoping for that one to pass. Will be selling out house in few months and we are less than 2 miles from NY border and 10 miles from NJ. Still my property taxes are $1900 vs $5000 in NY and $6500 in NJ for the same house. Would have been even better with 0 taxes.

My friend realtor told me that the prices of homes would go up 15-20% in PA for homes near NY,NJ. It's all about that maxed out monthly payment. $6500 in taxes translates to $542 extra in monthly payment.

coppertop

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Re: PA to eliminate property taxes
« Reply #15 on: December 08, 2015, 07:01:07 AM »
We all need to get on our state legislators to do something about property tax.  I pay almost $5,000 for a 1400-square-foot cape cod on about .6 acre of ground.  Ridiculous.  We live in Montgomery County, near the Bucks line.

neophyte

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Re: PA to eliminate property taxes
« Reply #16 on: December 08, 2015, 08:08:29 AM »
As a lower income, non-property owner, this would have been bad for me.  I like the simplicity of not having a graduated income tax, but I already pay more in state and local income taxes than I do in federal.
« Last Edit: December 08, 2015, 08:12:40 AM by neophyte »

Davids

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Re: PA to eliminate property taxes
« Reply #17 on: December 08, 2015, 08:13:58 AM »
If you rent in PA then this is definitely not good. But if you are a homeowner then this appears to be a pretty good deal, unless you make a really very very high income where that extra percentage increase is actually greater than your property taxes.

2lazy2retire

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Re: PA to eliminate property taxes
« Reply #18 on: December 08, 2015, 08:43:48 AM »
I wonder where the push for this was coming from? Its not unusual for new houses around these parts to be valued at 1-1.5mil + and as new builds the tax would be around 2% or 20-30K/year -  that would mean the home owner would need to be earning 1.3-2million before the 1.5% income tax hike would bite.
The wealthy were likely to be the biggest beneficiaries

Reynold

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Re: PA to eliminate property taxes
« Reply #19 on: December 08, 2015, 08:57:46 AM »
We all need to get on our state legislators to do something about property tax.  I pay almost $5,000 for a 1400-square-foot cape cod on about .6 acre of ground.  Ridiculous.  We live in Montgomery County, near the Bucks line.

From what I can tell, local governments want about "X" dollars per house, and they don't really care how much the house is worth.  My in-laws in upstate nowhere NY if they hadn't had an "elderly" discount would have been paying almost as much property taxes as we were in NJ in a place triple the value. 

If you look at it from the government's point of view, it makes sense, they need to spend a certain amount (on average) on educating your kids, providing police protection, etc. and that amount doesn't vary tremendously based on what your house would sell for.  What bothers me more is the revenue grabs we see from states like CA that want to tax your pension even after you move out of state, NY state wanting to hit out of state vacation home owners with income taxes, and things like that. 

oldmannickels

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Re: PA to eliminate property taxes
« Reply #20 on: December 08, 2015, 10:08:50 AM »
We all need to get on our state legislators to do something about property tax.  I pay almost $5,000 for a 1400-square-foot cape cod on about .6 acre of ground.  Ridiculous.  We live in Montgomery County, near the Bucks line.

From what I can tell, local governments want about "X" dollars per house, and they don't really care how much the house is worth.  My in-laws in upstate nowhere NY if they hadn't had an "elderly" discount would have been paying almost as much property taxes as we were in NJ in a place triple the value. 

If you look at it from the government's point of view, it makes sense, they need to spend a certain amount (on average) on educating your kids, providing police protection, etc. and that amount doesn't vary tremendously based on what your house would sell for.  What bothers me more is the revenue grabs we see from states like CA that want to tax your pension even after you move out of state, NY state wanting to hit out of state vacation home owners with income taxes, and things like that.

This is the way I understand it as well. Local governments had overspent in prior years relying on state funding. When state funding dries up the only thing they can do is raise property taxes because of the Uniformity Clause in PA's constitution. This led to a ramp up in suburban property taxes over the past 3/4 years. This is only going to get worse as there are a couple big court decisions are looming in PA that have gone or are likely to rule against local government revenues.

dude

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Re: PA to eliminate property taxes
« Reply #21 on: December 08, 2015, 10:25:36 AM »
Eliminating property taxes, it seems to me, is a boon to the well-to-do, and a blow for the less fortunate, since the poor don't tend to own homes.  And the poor are disproportionately affected by sales taxes.  This is a pretty regressive scheme, especially if it lets businesses off the hook for commercial property taxes.

neophyte

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Re: PA to eliminate property taxes
« Reply #22 on: December 08, 2015, 11:19:47 AM »
Eliminating property taxes, it seems to me, is a boon to the well-to-do, and a blow for the less fortunate, since the poor don't tend to own homes.  And the poor are disproportionately affected by sales taxes.  This is a pretty regressive scheme, especially if it lets businesses off the hook for commercial property taxes.
Income tax in PA isn't progressive so while it is technically proportionate, the poor will probably feel it more. The good thing about sales tax is that most groceries and clothing are exempt. If you don't buy a lot of stuff, you don't end up paying much sales tax. 

2lazy2retire

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Re: PA to eliminate property taxes
« Reply #23 on: December 08, 2015, 12:05:16 PM »
We all need to get on our state legislators to do something about property tax.  I pay almost $5,000 for a 1400-square-foot cape cod on about .6 acre of ground.  Ridiculous.  We live in Montgomery County, near the Bucks line.

From what I can tell, local governments want about "X" dollars per house, and they don't really care how much the house is worth.  My in-laws in upstate nowhere NY if they hadn't had an "elderly" discount would have been paying almost as much property taxes as we were in NJ in a place triple the value. 

If you look at it from the government's point of view, it makes sense, they need to spend a certain amount (on average) on educating your kids, providing police protection, etc. and that amount doesn't vary tremendously based on what your house would sell for.  What bothers me more is the revenue grabs we see from states like CA that want to tax your pension even after you move out of state, NY state wanting to hit out of state vacation home owners with income taxes, and things like that.

This is the way I understand it as well. Local governments had overspent in prior years relying on state funding. When state funding dries up the only thing they can do is raise property taxes because of the Uniformity Clause in PA's constitution. This led to a ramp up in suburban property taxes over the past 3/4 years. This is only going to get worse as there are a couple big court decisions are looming in PA that have gone or are likely to rule against local government revenues.

I think the big challenge is the spending especially the schools, if the State funding stops how are the poorer districts expected to manage/compete?. A local article a few years ago highlighted the difference between 2 neighboring townships - one had 135K of property to tax per student in the district the other had 1 million - it's crazy, the worst schools have the higher taxes and the whole system is self perpetuating.

Zaga

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Re: PA to eliminate property taxes
« Reply #24 on: December 08, 2015, 12:24:03 PM »
Good point, I'm in a poor town that still has decent schools.  If they switch over to only getting money from the increase in state income taxes I bet the money for the local schools will be cut in half.  Honestly, I don't know how it is that they have managed to be a good school in the first place with such a poor tax base.

Apples

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Re: PA to eliminate property taxes
« Reply #25 on: December 08, 2015, 12:34:12 PM »
I just want to say that our entire state does not live near Philly.  Nor do we all like Philly :p  I cannot just nip over to Delaware to do shopping, it's 3 hours away from my house!  So the statement about going there to do shopping was small minded and only applies to a portion of the state.  The portion of the state well known for thinking of itself as representative of the state and full of itself.  :p

As a farmer, I'm generally against increasing property taxes though the ACRE/Homestead provisions mean I don't pay nearly as much per acre and structure as the average homeowner.  But increasing income and sales taxes would hurt our employees who don't make as much money, and only 10% of whom own their property.  Our farm owns the houses the other others are living in, and we don't pass on the property tax increases to them (since we don't charge rent).  I do hope they reevaluate how they determine how much money each school gets.  Our rural school district could use a greater amount, which some articles in the paper recently have shown we would get. 

2lazy2retire

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Re: PA to eliminate property taxes
« Reply #26 on: December 08, 2015, 01:27:25 PM »
I just want to say that our entire state does not live near Philly.  Nor do we all like Philly :p  I cannot just nip over to Delaware to do shopping, it's 3 hours away from my house!  So the statement about going there to do shopping was small minded and only applies to a portion of the state.  The portion of the state well known for thinking of itself as representative of the state and full of itself.  :p

As a farmer, I'm generally against increasing property taxes though the ACRE/Homestead provisions mean I don't pay nearly as much per acre and structure as the average homeowner.  But increasing income and sales taxes would hurt our employees who don't make as much money, and only 10% of whom own their property.  Our farm owns the houses the other others are living in, and we don't pass on the property tax increases to them (since we don't charge rent).  I do hope they reevaluate how they determine how much money each school gets.  Our rural school district could use a greater amount, which some articles in the paper recently have shown we would get.

Everyone knows we are talking about the blue corners of the state not the drive thru red bit ;). Pitt, whats the sales tax like in Ohio

Cassie

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Re: PA to eliminate property taxes
« Reply #27 on: December 08, 2015, 02:51:31 PM »
In NV the tax is based on the age of your home. So if you buy a new home the taxes are much higher. So we bought a 1950's house and only pay $600/year which is insanely low. This was done so that elderly people could afford to stay in their homes.

Zaga

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Re: PA to eliminate property taxes
« Reply #28 on: December 08, 2015, 04:04:28 PM »
I just want to say that our entire state does not live near Philly.  Nor do we all like Philly :p  I cannot just nip over to Delaware to do shopping, it's 3 hours away from my house!  So the statement about going there to do shopping was small minded and only applies to a portion of the state.  The portion of the state well known for thinking of itself as representative of the state and full of itself.  :p

As a farmer, I'm generally against increasing property taxes though the ACRE/Homestead provisions mean I don't pay nearly as much per acre and structure as the average homeowner.  But increasing income and sales taxes would hurt our employees who don't make as much money, and only 10% of whom own their property.  Our farm owns the houses the other others are living in, and we don't pass on the property tax increases to them (since we don't charge rent).  I do hope they reevaluate how they determine how much money each school gets.  Our rural school district could use a greater amount, which some articles in the paper recently have shown we would get.

Everyone knows we are talking about the blue corners of the state not the drive thru red bit ;). Pitt, whats the sales tax like in Ohio
It's about the same as in PA, except in Ohio they charge sales tax on food and clothing and in PA they don't.  So in our area (I'm very close to the border, could walk in theory) we actually get a good amount of people from Ohio coming over to shop for clothes.

coppertop

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Re: PA to eliminate property taxes
« Reply #29 on: December 09, 2015, 08:22:12 AM »
The problem as I see it with property tax is that the county assesses your home based on what someone else thinks its value is.  The same house a half mile away in a different county will be assessed completely differently.  Bucks County has not reassessed since the 1970s.  Montgomery County reassesses frequently.  At least an income tax would be a percentage on dollars earned and would be the same percentage throughout the state.  The system as it is right now is not at all fair.  When you retire and your income goes down, so does your income tax.  But the property tax on your home just keeps going up year after year, regardless of whether your ability to pay for it goes up for down.  To get relief from my property tax, I am going to have to file an assessment appeal - and maybe they will reduce my tax, but maybe they won't.