Totalitarian Pennsylvania Update.

Our moral and intellectual superiors keep trying to separate us from our money and we fall for their schemes every time because we are more like sheep than men.

Here are a few things to keep in mind when dealing with the Commonwealth's (and other) kleptocrats, kiddies:

1) They depend on you being confused and apathetic. That is why their schemes are never presented in plain language or explained thoroughly. You must educate yourselves and get involved, or you will be robbed again.

2) This so-called property tax relief nonsense is designed to be "revenue neutral", which means taxes will not be reduced. The odious tax burden caused by Democrass and Repansycan vote-buying will only be shifted from from one set of victims (otherwise known as taxpayers) to another.

It is time to stop trying to screw our neighbors out of their hard earned money so we can pay less! It is time for all of us to unite against the enemy of all decent people - the political class!

3) Increasing income taxes is stupid. Taxes withheld by employers are less noticeable to sheep and kleptocrats do not like to hear bleating. It tends to cause indigestion during those lavish expense account meals. At least with property taxes, you are forced to see the actual amount they are stealing from you when you write them a check for their yearly pound and a half of flesh.

4) Taxes and spending at the federal, state and local levels must be slashed immediately. Across the board and permanently.

5) Income and property taxes must be eliminated immediately. The only fair tax is a consumption tax. (NOT a "value added" tax!)

6) If you have ever wondered why your community, state, and country aren't pleasant places to live anymore, I suggest you seriously consider confiscatory taxes and insane spending.

7) Vote NO! in May's Primary Election on the ballot question to authorize the partial shift from property taxes to income taxes.


The Daily Times: A Time to Act
Gov. Ed Rendell calls it a landmark bill that will deliver statewide property-tax relief and give Pennsylvanians a greater say in how their money is spent.

School boards call it a headache.

Voters must make up their minds by May 15, when they go to the polls to decide whether to raise their income taxes in exchange for lower property taxes.

Consider this a crash course on Act 1, the product of the 2006 special legislative session in Harrisburg that is changing the way school budgets are crafted and bringing the public into a process long left to elected officials and school administrators.

Pop an aspirin and let's get started.

Signed into law last summer, Act 1 will distribute an estimated $1 billion in annual slot-machine revenue to school districts for property-tax relief. The districts that need it the most will get the most, and vice versa.

In order to keep future tax increases in check, most school boards will be required to adopt their preliminary budgets by mid-February and submit them to the state Department of Education for review.

If the proposed property-tax hike exceeds an inflationary index - ranging from 3.4 percent to 5.4 percent among Delaware County districts - and the reason for the new spending falls outside a list of allowable exceptions, the board must get voter approval through a "back-end" referendum.

Voters will also get the chance this spring to decide whether to approve a new or increased earned income tax or personal income tax to further reduce property taxes. It is a revenue-neutral tax shift, meaning if the ballot question is approved, the district will not gain or lose money, but simply collect it differently.

Tax study commissions across the state examined the issue last year, and made recommendations to their school boards regarding the type and rate of income tax to be put on the ballot.

While the recommendations are not binding, voters in most of Delaware County's 15 districts will likely be asked to approve or reject an earned income tax or personal income tax of around 1 percent.

Under Act 1, the new income tax revenue must be used to fund a decrease in local property taxes.

Winners and losers

This is where it gets a bit hairy.

A tax shift will generally benefit senior citizens and low-wage earners because they have less taxable income. In most cases, their property tax savings would exceed what they pay through the new income tax.

Dual-income families and high-wage earners, however, may end up paying more than they do today because the income tax would exceed what they save in property taxes.

Renters are the biggest losers in this equation. They won't receive a property tax cut, but will still be on the hook for the new income tax. Furthermore, landlords won't get any tax relief on their apartment complexes - the reductions only apply to primary residences - and would pay a higher income tax that may get passed on to their tenants.

Delaware County residents who work in Philadelphia would be among the greatest beneficiaries of a tax shift. They pay the Philadelphia wage tax and are exempt from local income taxes under the Sterling Act, so their property taxes would go down with no repercussions.

And, of course, there are a lot of middle-class folks for whom the shift would be a wash. Their property taxes would decrease by roughly the same amount their income tax would increase.

In Interboro, for example, where a new 1 percent earned income tax is expected to trigger a $360 reduction in property taxes, the magic number is about $36,000. A household that earns less would save money; one that earns more would lose money, according to an analysis by the district's tax commission.

"This is a very personal issue and people are going to look at the effect on their wallets before they actually pull the lever," said David Davare, director of research for the Pennsylvania School Boards Association.

Will it pass?

In an off-year election, senior citizens are likely to have a large say in whether the tax shift passes because they are typically the most steadfast voters. But many observers believe the proposal will be rejected anyway.

While Pennsylvania seniors have indicated a "strong desire" to shift away from the current tax structure, the complexity of the issue could leave them unsure of how to vote, according to Ray Landis, associate state director of AARP Pennsylvania, which has 86,132 members in Delaware County.

"The ballot question is written in a manner that, for an uninformed voter, they're going to read it and it looks as if they are being asked to approve a tax increase," Landis said.

Then there are people like Brookhaven's Lyn Delgott. She was a member of the advisory committee that endorsed Penn-Delco's existing 1 percent earned income tax in 1990, but will be voting against this year's ballot question.

With both she and her husband working, Delgott, 54, figures they'll lose money on the deal. Penn-Delco is considering implementing a 1.5 percent personal income tax to replace its 1 percent earned income tax.

"I just think we were handed a piece of legislation that doesn't make a lick of sense," said Delgott, who opposes Act 1 because it requires school boards to adopt a preliminary budget earlier in the year and doesn't give districts the option not to propose a tax shift.

"What bothers me is it's a tax shift, as opposed to real tax relief," she said.

Many Delaware County school board members are also urging voters to reject the ballot question, saying the costs outweigh the benefits.

EIT vs. PIT

The earned income tax (EIT) is a tax on wages and salaries, while the personal income tax (PIT) includes all earned income plus investment interest, dividends and other forms of income.

Statewide, most districts already levy the EIT, but the PIT has never been collected at the local level, which could pose a challenge for districts and create its own set of costs, according to Mark Kuperberg, a Swarthmore College economics professor and member of the Wallingford-Swarthmore School Board.

"One of the virtues of the property tax is it's very easy to collect," Kuperberg said. "The thing you are taxing is right there."

But the income tax is more equitable because it is based on an individual's ability to pay. "You really have to say, 'What kind of system do we think is fairer?' instead of voting based on one's narrow self interests," said Kuperberg, who supports Act 1 in principle, despite its flaws.

Wallingford-Swarthmore and four other Delaware County districts are considering implementing a PIT under Act 1. Because it taxes a broader range of income, the PIT typically generates slightly more income than an EIT of the equivalent rate.

Social Security and pensions are not included under either tax, but seniors could be turned off by a shift to the PIT if they supplement their fixed income with investments.The rest of the county's school districts are considering an EIT of between 0.8 percent and 1 percent.

If the shift to a 1 percent earned income tax is approved in the Ridley School District, homeowners can expect an estimated $265 property tax reduction in the first year, assuming only 60 percent of all earned income in the district is collected, according to Superintendent Nicholas Ignatuk.

Ignatuk estimated that by 2009, when gaming revenue reimburses districts for residents who work in Philadelphia and are exempt from local income taxes under the Sterling Act, the annual reduction is expected to reach $712 or higher.

Ignatuk estimated that 60 percent to 65 percent of the district's residents would benefit from such a shift. Whether it gets voter approval in the primary is another question.

"I think most people don't really have an idea that it's even coming," he said.

What's next?

School districts must hold a public hearing and adopt a resolution by March 13 authorizing the earned income tax or personal income tax ballot question.

If the question is rejected this year, districts have the option to place it on the ballot in 2009, at which point a tax shift could be more appealing to voters because the property tax savings are expected to be bolstered by gaming revenue.

"In my mind, once the gambling money is here to replace the loss of the Sterling money, there really is no question we should make the switch," Kuperberg said.

Regardless of the outcome, school boards are already adjusting to new fiscal restraints and a state-imposed timeline that requires most of them to adopt a preliminary budget next month - before they know exactly how much state or federal funding they will receive for the upcoming school year. "We can just basically make guesses and estimates as to what that's going to be," Ignatuk said.

Act 1 also includes a back-end referendum that gives district residents the power to vote down property tax increases that exceed a local inflationary index. Most states already have a system that caps yearly tax hikes.

School districts can apply for referendum exceptions - include emergency spending, increased special education costs and certain construction projects - that allow them to exceed the index. But Act 1 will almost certainly limit the year-to-year growth of school budgets.

Proponents of school spending caps - via a referendum or otherwise - say they force districts to operate more efficiently and live within their means. Opponents warn they can lead to the elimination or curtailment of programs such as art, music and athletics and complicate future contract negotiations with teachers unions.