HB 1776, The Property Tax Independence Act
A solution that makes sense for Pennsylvania
There is no “Holy Grail” of property tax reform. Any property tax reform measure will involve
shifting the tax levy from one type of tax to another – there’s no free ride. But there are ways
to fund our schools and to ensure a better education for our children that are fairer and more
effective than property taxes.
Many Pennsylvanians lose their homes and a lifetime’s work to sheriff’s sales each year because
they can no longer afford to pay their property taxes. Senior citizens on fixed incomes are
increasingly forced to sell their homes because of unrelenting increases in their tax burden.
Young families cannot afford to purchase a home because the per-month property tax escrow is
simply too high. Multigenerational family farms are being sold piece by piece to pay property
taxes, devastating Pennsylvania agriculture. School districts in areas of the state with limited
population and no commercial tax base are in distress and are unable to afford to give their
children a quality education. Job losses, outmigration, and abysmal state economic
performance caused by burdensome property taxes are devastating Pennsylvania’s economy.
A sensible, broad-based, statewide and state-administered property tax replacement funding
source is needed eliminate an antiquated and regressive property tax system, to end these
educational inequities, to return home ownership to the homeowner instead of allowing the
government to effectively own our homes, and to restore Pennsylvania’s economic vitality.
THE BOTTOM LINE: Our current system of school funding is crumbling. This decay has been
occurring for many years and continues to escalate. Home foreclosures and tax sales are
occurring at an expanding rate and the home market is at a standstill. The opportunity to fund
education from a statewide source is rapidly vanishing as relentlessly rising property taxes
outpace available revenue. This will have major implications for school districts statewide. It
can no longer be ignored or diminished. Replacement of the school property tax must be
THE PLAN AND HOW IT IS FUNDED
After many months of work and negotiation by key legislators, a plan to eliminate and replace
school property and local school nuisance taxes has been finalized and will be formally
introduced in both the Pennsylvania House or Representatives and Senate in the near future.
House Bill 1776, The Property Tax Independence Act, looks in part to the former School
Property Tax Elimination Act (SPTEA) for its basic structure. While The Property Tax
Independence Act mirrors some of the provisions of the former SPTEA, the plan has been
comprehensively rewritten to account for lawmakers’ concerns and preferences in order to
eliminate objections common to the previous legislation.
As with the former SPTEA, The Property Tax Independence Act will eliminate all school property
and nuisance taxes across the Commonwealth and will replace those taxes with funding from a
single state source.
The most important provision of The Property Tax Independence Act is that it is tax revenue
neutral. To provide absolute fairness, the legislation has been carefully crafted to ensure that
the tax swap provision of the plan does not raise one dollar more than is already collected by
the school property tax mechanism.
The Property Tax Independence Act utilizes a modernized school funding plan based on 21st
century economic realities.
- The Property Tax Independence Act will ABOLISH the school property tax on all homesteads,
farmsteads, and businesses as well as eliminate the local school Earned income Tax (EIT) and
other Act 511 nuisance taxes imposed by school districts.
- School property tax elimination will be accomplished via a two year phase-out of school
property taxes. In the first year after enactment, school property taxes will be frozen at their
current level; in the second year they will be completely eliminated except for a small portion
that will be retained in each school district to retire the individual district’s outstanding long-
- The Property Tax Independence Act utilizes our current sales tax mechanism to fund schools,
restoring the original intent of the tax. The “The PA Education Sales Tax” was enacted in 1953
for this specific purpose and virtually 100% of the revenue from the sales tax is still dedicated to
- The sales tax provides a predictable and stable funding source that automatically increases
revenue in sync with economic growth. This is in clear contrast to the school property tax which
is not based on economic growth and is subject to much variation, forcing annual increases in
the tax to increase revenue.
PROPERTY TAX ELIMINATION