Jan 27, 2019

By the numbers: Pennsylvania ranked No. 34 in 2019 business climate index

Via PA Watchdog

Pennsylvania finished at No. 34 among the 50 states in the Washington-based Tax Foundation’s analysis of how states’ tax systems affect their ability to attract and retain businesses.

The analysis examined more than 100 variables involving the states’ primary methods of taxation: corporate taxes, individual income taxes, sales taxes, unemployment insurance taxes and property taxes. Many of the top-rated states lack one of those five major taxes, but a few apply all the taxes with low rates and broad bases.

Pennsylvania ranked No. 43 for its corporate tax; No. 18 for its individual income tax; No. 21 for its sales tax; No. 34 for its property tax; and No. 46 for its unemployment insurance tax.

The State Business Tax Climate Index, which was released in September, aims to show how state tax systems compare with each other and provide a blueprint for improvements, according to a post on the foundation’s website. The study is based on tax rules in effect for fiscal year 2018-2019.

Which State Tax Systems Are Poised to Generate Economic Growth?
StateCorporate Tax RankIndividual Income Tax RankSales Tax RankProperty Tax RankUnemployment Insurance Tax RankOverall Rank
South Dakota113328393
New Hampshire459144446
North Carolina3162033712
North Dakota23203261417
West Virginia132817183019
New Mexico21314111025
South Carolina193434272735
Rhode Island322923432937
New York74842473148
New Jersey475045483250
Source: Tax Foundation

Property tax ‘relief’ that exacerbates inequities

Oh, where does one begin with the folly of public officials seeking to use the legislative process to addto the inequities of the property tax system?
The Post-Gazette reports that a trio of Democrat legislators representing Pittsburgh will seek to amend a 1988 law applicable to Philadelphia (put in place there in 2013 but not allowing homeowners to also claim a homestead exemption) and Pittsburgh/Allegheny County (but never put into practice here) granting them the power “to manage” their property taxes.
Perhaps the more accurate phrase would be “to manipulate.”
Lack of a statewide mandate for regular reassessments — and Allegheny County officials’ steadfast refusal to do the same for political reasons — have left the system filled with gross inequities.
Not keeping up with ever-changing valuations, some properties are underassessed. Others are over-assessed. That means the former aren’t paying their fair share while the latter are paying an unfair share.
And what Sen. Jay Costa and Reps. Ed Gainey and Sara Innamorato seek to do will only exacerbate the inequities.
To wit, they want to create a “Longtime Owner Occupant Program (LOOP) that would, as the P-G reports, “exempt certain homeowners – those who, for example, have owned property for a minimum of 10 years in a rapidly developing neighborhood – from having to pay increased property taxes or allow them to defer the taxes to the next owner.”
Or as Costa told the newspaper:
“This is an attempt to allow those folks to stay in those neighborhoods, those folks who have spent many, many years, in good times and in bad. We don’t want them to be forced out of their homes because of the positive economic development that’s been taking place.”
The City of Pittsburgh is analyzing housing data in fast-developing places such as Bloomfield, East Liberty, Friendship and Lower Lawrenceville and is “poised to begin a public process to decide which neighborhoods would qualify for protection,” the newspaper’s Ashley Murray reports.
The program would apply to city real estate taxes, not county taxes and not school taxes, the latter of which represent the lion’s share of real estate tax bills.
But the simple fact of the matter is that such a program will offload part of the tax burden onto someone else. And it’s not as if the values of these targeted homes haven’t increased and, with that, increasing the equity position of these homeowners. Why should some essentially subsidize the rise in home values of others?
If amended by the state Legislature, this measure would create a situation in which comparable properties would be taxed at different rates solely based on the occupants’ longevity in these respective homes. “Fair”? “Equitable”?
Perhaps next “The State” will guarantee a value floor for the real estate of long-time residents in rapidly declining neighborhoods?
And as with any government operation, unintended consequences loom large.
“Suppose the owner of a property bought the house in a protected neighborhood when he was 35,” says Jake Haulk, the president-emeritus of the Allegheny Institute. “He is now 45 and gets a massive tax break for 25 or 30 years. A 55 year old who bought this year would have to wait until he is 65 and still be living in the house before being eligible.”
Then, too, the Ph.D. economist who’s now a senior advisor to the think tank says, “protected properties might increase in value faster than the market says because of the low taxes and then take a big hit when the tax break goes away upon sale of the property.
“Like rent control, this will have massive unintended consequences. Other groups of property owners will demand relief of some sort,” Haulk predicts.
“The only good news is that the county and district have no incentive to participate,” he notes.
And here’s something else to ponder, per Haulk:
With no regular reassessment, the assessed value will not change unless the property is sold and a governing body appeals the value based on the sales price. The city is on record as not appealing assessments. But the buyer would get hit with the higher assessment following another successful taxing body appeal.
“So, rising property values because of stronger demand will have no impact until a county reassessment or unless the city appeals based on sales prices,” he reminds. “If regular reassessments were in place, all property owners in areas with well above average real estate price increases will get hit hard with higher taxes even with the windfall provision.
“A tax relief program for some of the hard hit will not sit well with others looking at big increases. It will reduce incentive to sell by the beneficiaries of the program, further distorting the market. This plan just has not been thought out well,” Haulk concludes.
Sans Allegheny County officials suddenly having an epiphany and ordering regular reassessments, it remains incumbent upon the General Assembly to pass legislation mandating the same.
Otherwise, this mess will only grow and, with past being prologue, the courts will be forced to step in. And the blame will fall squarely on “leaders” who failed to lead with the latest in a long line of gross panders.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

Jan 26, 2019

Cycle of Dependency

By Lowman S. Henry

The headline blared from the Sunday opinion page: Where's Washington's Heart?  Rather than being an editorial on helping to lift people out of poverty it was instead - predictably - a robust and deeply flawed defense of government social welfare programs.

Decades after President Lyndon Johnson declared a "war on poverty" that turned out to be a massive expansion of government dependency programs, and after the expenditure of trillions of taxpayer dollars on those programs, the needle on poverty has barely moved.

What has changed is the number of Americans trapped on the government dole.  The Left believes this is a good thing - government is assisting more people.  And while helping people who truly need assistance is a shared goal across the political spectrum, conservatives want to take that one step further and return as many people as possible to self-sufficiency.

The term "cycle of dependency" is used by social scientists to describe how addiction to government aid gets handed down from one generation to the next.  But, there is another "cycle of dependency" that explains the Left's fixation with growing the number of people receiving public assistance.

Here is how it works: more people dependent on government creates more voters will support those candidates pledging to preserve and expand their benefits; this results in the election/re-election of Left-leaning candidates who then work to increase the number of people dependent on such programs, repeat, repeat and repeat.

Attempt to break this cycle and the Left will attack saying you lack compassion, or as the headline put it "heart."  This too is a favorite, and highly effective, tactic of the Left.  Big government advocates are exceptionally good at messaging.  They can take any government program, regardless of how ineffective or inefficient it might be, and make it sound like mom and apple pie.  For example the "Affordable Care Act" made health care less available and more expensive; illegal immigrants become "dreamers" and the murdering of babies in the womb becomes "reproductive rights."

What triggered the editorial screed, augmented by the sub-headline "When it comes to helping hunger Americans, we have lost our humanity," was a move by the Trump Administration to allow states greater flexibility in moving people off the Supplemental Nutritional Assistance Program (SNAP), commonly known as food stamps, and into self-sufficiency.

You would think helping Americans become more self-sufficient and thus not needing government assistance would be an obvious goal.  But, it would break the Left's electoral cycle of dependency so crank up the propaganda machine and declare such efforts to be heartless.

But are they heartless?

The Trump Administration's goal is to foster the movement of able-bodied adults without dependent children from dependency into the work place.  A similar effort in Pennsylvania passed the General Assembly last year, but fell victim to a veto by Governor Wolf who saw the threat to his electoral coalition.

Opposition to this policy is the opposite of heartless; it restores human dignity.  Nobody is proposing that children go unfed; or those with physical or mental disabilities are denied SNAP benefits.  The goal is for those able to work, and for whom jobs are available, to do so.

This is, as conservative author Arthur Brooks termed it, the "conservative heart":  Provide equality of opportunity through educational reforms such as expanded school choice and job training programs.  Foster a pro-growth economy that makes available good, family sustaining jobs.  This approach will break the classic cycle of dependency and move those who are able from being dependent on government to helping government through their tax dollars funding programs for those in actual need.

In fact, advocacy for the continued trapping of able-bodied, able-minded individuals on government assistance is what is truly heartless.  Doing so with an ulterior political motive is not only heartless, but downright mean. It is time we stopped falling for the Left's spin and put into place those policies that restore more people to the dignity of self-sufficiency.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal.  His e-mail address is lhenry@lincolninstitute.org.)