Pennsylvania and the Big Lie of Home-Ownership

The Pennsylvania legislature has yet to pass a budget for this fiscal year. With a Democratic governor and a GOP-dominated legislature, we have a form of gridlock in Harrisburg that mirrors the disfunction in Washington. For those who don’t know much about the Keystone State, James Carville famously described it this way: Philly in the east, Pittsburgh in the West, and Alabama in the middle. Electorally, Pennsylvania looks like a sea of red with two small peninsulas jutting out from the southeast and southwest.

My state representative Steven McCarter, a Democrat, announced a town hall meeting last week to present his version of events. No surprise, McCarter laid much of the blame for the stalemate on the opposing party, and indeed, the GOP has held quite firm on its pledges of not raising or creating new taxes. The room of nodding heads expressed their various vexations at these developments, agreeing with Representative McCarter that only new taxes could settle this budget impasse.

This tempest has brewed since the previous administration, when the previous administration allowed a decrease in education funding to balance the budget, prompting tax hikes in many (if not all) school districts to cover the shortfall. We got hit with this as well. To give you an idea, when we bought this house in 2002, our property taxes totaled about $3,300. Last year, we paid more than $7,000. The assessment of $160,000 did not change.

Most of that increase went to the school district run by a school board with the power to tax — an alien concept in my home state of Massachusetts. Who serves on our school board? Mostly well-to-do professional types, some with backgrounds or connections in education, but none who must dip into the grocery budget to pay their taxes or apparently have much empathy with those who do. In other words, they primarily represent the school’s interest, not the taxpayers.

In Pennsylvania, I hear numbers approaching 10,000 homes listed in sheriff’s sales every year because their owners, some of whom lived in their house for decades, can no longer afford to pay the school property tax. Our governor said that in order to fund his “investment in education,” some people will lose their homes. I never belonged to the Democratic party, but I never believed that inducing homelessness was part of their education agenda.

I have long had an issue with property taxes. It’s a classic “No good deed goes unpunished” scenario. The better you make your home, the more you can expect to pay the town to live in it. Or worse, the more your new neighbor paid for his new home, the more you can expect to pay after a reassessment, even if you’ve done nothing to improve your property. Imagine your neighbor gets a promotion and your income tax goes up.

Like most of us, I once saw property taxes as necessary evil. How else do we fund schools, police, parks, and the like? But I’ve also seen the effect of this system across the country. Property taxes do not adhere to the laws of supply and demand. They can disrupt stable neighborhoods by driving out longtime, lower income residents. Conversely, when a town loses population — or to be more exact — loses productive population, taxes and fees increase to maintain or even increase its budget, much of it to cover pension obligations and expanding social programs. Either way, if you own your home, you lose.

We want to believe that the price is worth it because a good school system raises the value of everyone’s property. Homeowners, in theory, benefit both directly and indirectly from this. We get a higher sale price down the line, and better schools mean a more productive and prosperous society. In theory.

The big home ownership lie

In our case, these are the numbers: The market value of our house in 2002 (a down year) was about $225,000. Sixteen years later, it has reached (according to a real estate agent we spoke with) about $270,000. In that time, we have already paid over $40,000 in property taxes alone. We also paid for a new roof, kitchen, windows, a small addition with a bathroom, and other improvements — or at least another $75,000. This would put us $65,000 in the hole. So much for the investment value of our house. We will never recover from this. (Incidentally, the property tax and mortgage interest deductions are already covered by the standard deduction, which we’d get if we lived in a tent). Your mileage may vary.

With all this in mind, I go to hear Representative McCarter talk about funding for not just schools and state agencies, but to provide grants to the myriad of independent (tax-free) non-profits that also provide social services on behalf of the state. McCarter repeatedly expressed frustration that the Republicans would not allow the government to establish new revenue streams (taxes) or to raise revenues (taxes) on (name your product or service). Nowhere in McCarter’s talk, did he discuss the prospect of finding savings anywhere within the multiple layers of Pennsylvania’s strata of governments.

Pennsylvania has one of the more peculiar and complex systems of governing of any state I know. We have both state and municipal governments, of course, but we also have county, borough, and township governments, some of which overlap. Within that are 500 school districts, which as previously mentioned, have the power to tax and operate independently of the municipal governments. In other words, homeowners serve two masters.

I’ve long-since stopped singing the praises of buying a home. For anyone thinking it provides a safe place to put their money, the numbers simply do not work for most people. In a state like Pennsylvania, it especially makes no sense since the school board will tax much of your “investment” away for the sake of “the children.”

It goes beyond the obvious to say that no one likes taxes, but at some point we have to stand back and take a serious look at how we levy them and why. When I began to deal with Jenkintown’s sidewalk issues, I saw the bigger picture of funding municipal government and school districts. The view ain’t pretty.

Time to end the school tax

Pennsylvania has a group lobbying hard for the end of the school property tax, replacing it with small hikes in the sales and income taxes. I support the Pennsylvania Taxpayers Cyber Coalition and this proposal because I’ve come to see the property tax as greater threat to personal liberty than most every other tax. Good schools benefit everyone, so why does their burden fall almost entirely upon homeowners?

For most of the history of western civilization, only the wealthy owned property. Levying a tax served as a form of income tax, since those who owned property generated income from it. That changed with the rise of the middle class and the industrial revolution, but it changed wholesale after World War II thanks to the GI bill and the home interest deduction.

Despite property ownership falling within reach of most working Americans, local governments continued to apply a 17th century solution well into the 20th century. With the spread of suburbs, sparsely populated farming communities sliced and diced into thousands of new and valuable taxable subdivisions, while zoning away rental properties. In prosperous times, this works more or less, but when the housing market tanks or school costs rise faster than property values or people bolt, we got trouble.

In the face of The Big Lie, property tax becomes rent by another name. If not for financial reasons, why buy? Security? Independence? I can’t even plant a tree in my yard without applying for a permit. I replaced my shed several years ago with another of the exact same size and put it in the exact same spot, and I still had to pay the borough $40 to have it inspected. Made by Menonites, it’s better built than not only what it replaced, but also most new construction around here.

You have no friend in Pennsylvania

What is my representative proposing to do about this? This issue isn’t on his radar. His agenda as stated at the meeting consisted mostly of finding more money from a population and business community that already pays too much. I don’t necessarily agree with the Tea Party on a lot of things, but I completely get the frustration. After generations of so-called conservatives promising and failing to reign in government growth, and liberals’ assurances that higher taxes and regulations on business and the wealthy will fix what government broke in the first place, the only option left is to toss our sabots into the gears.

The so-called compromises of the past 40 years have not benefitted the working class. We work, we pay, and we see the expanding underclass and overclass benefitting from that work.

I am sorry about the poor and the indigent and the elderly and everyone else that seems to depend upon assistance from the government to get by, but my sympathies lie more with the people who feed that machine. They go to work every day for eight hours or more, five or six days a week or more. Or they put everything on the line to build a business and a dream. What are we doing for them, especially after all we have done to them? I look at Representative McCarter, and just don’t see the answers we need.

If you don’t live here now, please don’t move here. My mind has already left this state. Now I just need my body to follow.

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