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Independent, nonpartisan study is first of its kind
Sam Smith (R-Jefferson County) Continuing our commitment to address the growing property tax burden in Pennsylvania, House Republicans are leading an in-depth study of a plan that calls for the elimination of property taxes that fund public education in the Commonwealth. Educating our students and preparing them for the future is by far one of our most important responsibilities as a society, yet the property taxes used to fund the bulk of our education system place an unfair burden on seniors, working families and employers. Even as the legislature considers the governor's current property tax relief proposal, which is funded by expanded gaming, it is important to evaluate other possible solutions. The property tax issue has plagued our state for more than 30 years; we owe it to our citizens to explore every possible option to provide some type of tax relief. This is the first time the House has engaged in such a detailed, independent study of a tax reform proposal. The plan under study was conceived by Rep. Mario Scavello (R-Monroe County) and developed within the bipartisan Commonwealth Caucus chaired by Rep. Sam Rohrer (R-Berks County). The plan proposes to eliminate all school-related taxes for households and businesses, including school property taxes, as well as slash the state sales tax by one-third (from 6 percent to 4 percent). The sales tax base would broaden through the elimination of most exemptions for goods and services. The money would be segregated in an exclusive Education Operating Fund and used to fund public education in the state, thus lowering property taxes. Fishkind and Associates, a nationally recognized financial consulting firm based in Florida, has been retained to do comprehensive economic modeling of the potential economic impact of the plan. The firm was retained based on its leading reputation in economic modeling and experience with sales taxation. Fishkind has enlisted the assistance of Economy.com of the Wharton University of Pennsylvania, which is currently under contract with the Commonwealth and provides the official data from which the governor and the budget office prepare all state budgets. Plan supporters estimate the state could experience a significant economic boost with the elimination of the roughly $10 billion in property taxes paid annually by families and businesses. The nonpartisan study, which includes a peer review committee of outsiders, is needed to give lawmakers the data they need to make an informed decision on the Commonwealth Caucus Plan. Lawmakers in dozens of states are talking about the very concepts we have applied in our plan as a means of implementing a fairer, more effective tax system. Pennsylvania is taking a lead role in gathering hard data about the potential economic impacts of these new ideas. The study began Dec. 1 and is due to be finished by February. The major points of the study are to outline which additional goods and services will be taxed; what amount of revenue will be raised; and what effects these changes have on existing economies. Key elements of the plan include:
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