HB 1776, The Property Tax Independence Act
Frequently Asked Questions (FAQs)

First, let's look at the basic philosophy of House Bill 1776, the Property Tax Independence Act.

A simple substitution of the property tax with a Sales and Use Tax (SUT) as some lawmakers have suggested will not be effective at solving the education finance problem in Pennsylvania. Former governors' recommendations (and everyone else who recommends a similar idea) of raising the sales tax rate just to reduce property taxes a bit is a valueless recommendation. Like the failed Act 1, this proposal and others like it are all the same. They just throw different money at the problem. They incorporate nothing that fixes any of the causes of the current public school financing meltdown, do nothing to discipline out-of-control spending, and do nothing to improve economic conditions, restore homeownership, or address any of the existing severe financial problems facing our schools and the Commonwealth.

The authors of House Bill 1776, the Property Tax Independence Act, are sensitive to the philosophical underpinnings of this plan, as evidenced by the history of the development of this legislation over many years. The primary reason for using an expanded sales tax base to solve the property tax problem is first and foremost a financial reason. This is built on the premise that to ELIMINATE the school property tax in order to restore homeownership, we must have the following:

• A predictable revenue stream that will grow with economic activity so that, when designed properly (as it is in the Property Tax Independence Act), it will never again require an increase in the tax rate.
• A revenue stream that is the most broad-based possible so that:
• The financial burden is the lowest possible for all our citizens.
• The most people possible contribute to the tax because it is for the purpose of public education, which is a constitutional obligation for the benefit of all.
• It provides the most flexibility possible so that people have a choice in how they contribute (for example, when they buy and what they buy).
• A revenue stream that has the economic capacity to replace the current taxes used for paying for education costs. This criteria is ONLY met with the sales tax, and when one considers the fact that the sales tax was implemented by the Legislature in 1953 for the stated reason that it was to be the mechanism to provide the state's share of public education costs AND that the name of the sales tax in law today remains, "The PA Education Sales Tax," it makes good sense to use that tax as the primary funding source.

It is, however, important to note that the Property Tax Independence Act is the ONLY comprehensive financial reform plan ever put forward, and to date is the ONLY plan that has been vetted in the public through its predecessor versions, is simple to understand, and fully addresses ALL the problems we have with the current funding system.

While there are those who would argue that The Property Tax Independence Act seems socialistic in nature, the real fact is that the philosophical underpinnings of the plan are painstakingly free market in every element. In fact, it can be argued that the current system of government education is socialistic in that it provides no real parental choice, takes taxes at will, and through the power of government, can and increasingly does take people's property (their homes and farms) when they cannot afford to pay their "rent." That is truly the pattern of socialism.

Much has been written about the plan through its years of development and it has been directly presented to more than 50,000 people all across Pennsylvania with the same response in every location – nearly unanimous support.