HB 1776, The Property Tax Independence Act
Frequently Asked Questions (FAQs)
First, let’s look at the basic philosophy of HB 1776, The Property Tax Independence Act.
A simple substituting of 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
already incurred severe financial problems facing our schools and the Commonwealth.
The authors of HB 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 utilizing 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
• 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.
- Is the most flexible possible so that people have a choice in how they contribute (when they
buy, 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
Much has been written about the plan through its years of development and it has been
directly presented to over 50,000 people all across Pennsylvania with the same response in
every location - nearly unanimous support.
Below are some of the most frequently asked questions (FAQs) about HB 1776, The Property
Tax Independence Act.
How much money is required to fund K-12 public education in Pennsylvania? Who or what
entity determines this amount?
• Current total costs of providing K-12 public education in Pennsylvania is now approximately
$24.0 billion/year. This figure is the result of PDE and local districts' financial statements.
The addition of the sales tax on some items currently not taxed has produced opposition to
the bill since they believe it will hamper the ability to compete and be profitable. Is this a
• No. As the broadened sales tax will be uniform, any company, whether a Pennsylvania
company or an out of state company, that does business in Pennsylvania will be required to
collect the sales tax. Also, any Pennsylvania company that provides goods or services to an out
PROPERTY TAX ELIMINATION