We find ourselves in agreement with City Councilman John Lewis, who maintained at Monday night's Warren City Council meeting that if a tax increase is truly necessary to maintain city services at current levels, that burden should be shouldered by both the property tax and the earned income tax, rather than exclusively one or the other.
For decades, Pennsylvania has toyed with the idea of tax reform. We say toyed because every 10 years or so the folks in Harrisburg begin to talk about the regressive nature of the property tax, which is the primary source of revenue for school districts and municipal governments.
The property tax is considered regressive because it is not adjusted for a person's ability to pay, making it particularly burdensome for retirees and the long-term unemployed.
A person making $50,000 a year who owns a $100,000 house is likely to retire on about half of that income. Yet that person's house does not decline in value or assessment. While that person's ability to pay taxes is theoretically cut in half, the property taxes on his or her house do not decline. And, in the case of most homeowners in Pennsylvania, property taxes represent their largest local tax obligation. So, with a 3-mill increase in the property tax, that person's tax obligation will go up about $150 in the city (based on a 50 percent assessment rate).
Meanwhile, a person owning a $100,000 house and making $50,000 a year will also see a $150 increase, but be far more able to pay it than the retiree.
We would maintain that if people are indeed escaping the city for the townships based on taxes, it is not because one form of tax is higher than another in town, it is because the aggregate is much smaller outside the city limits because the townships by and large do not provide the same services as the city.
Councilman Lewis was simply asking for the tax burden to be shared a bit more compassionately by those who have higher incomes as well as those who have found their incomes sliced by as much as half.