(June 2003) For many years - and with ever-increasing outrage - Pennsylvanians have said property taxes are regressive, inequitable, unresponsive to economic change, difficult to administer, poorly and even dishonestly administered, a contributor to the decay of urban areas, a burden on poor people, and a hindrance to economic development. It’s little wonder that people love to hate property taxes.
While there have been lots of plans over the years to address these concerns, little actually has happened. Here are two. In the late 1980s, then-Governor Bob Casey proposed an overhaul of local taxes, and he wanted to severely reduce reliance on property taxes. And a new state law in 1998 permitted school districts to levy increased wage taxes in exchange for lower property taxes and a cap on future property tax increases. The voters soundly defeated Governor Casey’s 1980s reform plan in a statewide referendum. And of the 501 school districts eligible to implement the 1998 law, only four actually have done it. In spite of their ugly reputation, property taxes continue to be a staple of Pennsylvania’s local tax system.
As Pennsylvania’s leaders try - again - to reduce the state’s dependence on the property tax, IssuesPA investigated how Pennsylvania compared with other states, and looked within Pennsylvania to evaluate the overall burden on taxpayers.
How does Pennsylvania compare with other states?
Pennsylvania’s property tax revenues seem high, but a comparison with other states helps put those big numbers into perspective. According to the U.S. Bureau of the Census and Bureau of Economic Analysis data, Pennsylvania’s relative property tax burden is moderate. In 2000, Pennsylvanians on average spent $27.45 per $1,000 of personal income on property taxes - slightly below the U. S. average of $28.56. Pennsylvania ranked 24th of 50 states and the District of Columbia. Here are several factors influencing this ranking:
- Pennsylvania exempts tangible personal property from the tax base - such as machinery and equipment, inventories and cars - while a number of other states tax tangible personal property.
- The market value percentage included in the tax base local property tax rates applied to the base varies significantly. Pennsylvania imposes one rate within each taxing jurisdiction, while some states have multiple rates depending on property type. And differences in assessment practices can affect the relationship between market value and the taxable property base dramatically.
- The fact that Pennsylvania allows its local governments to impose a local tax on personal income reduces the dependence on local property taxes.
One more factor to keep in mind - these comparisons represent averages for the state as a whole. However, very few taxpayers are average.
What are the property tax burdens within Pennsylvania?
In Pennsylvania, there are a wide range of property tax burdens, depending on variables such as value of real estate, location, and even county assessment practices. To illustrate these differences, IssuesPA estimated the property tax burden for families in different sections of Pennsylvania using 2000 tax rates and these criteria: 1) the median owner-occupied housing value for the municipality and 2) a home with a market value of $100,000. Municipalities are urban, suburban and rural, statewide and have varying levels of median housing values. Property tax rates have been adjusted for differing assessment practices in each area.
The results vary significantly. (See table at bottom of page.) For the median housing value, the tax burden for the highest municipality was more than three times the burden for the lowest municipality in the sample. Actual tax rates in most locations differ only marginally when adjusted for differences in common level ratios. This means the differences in median housing value are the biggest tax burden driver.
If housing values remain constant at $100,000 for all areas, a different picture emerges. In this scenario, the most urban areas have the highest tax burden. The wealthiest municipality has the lowest. Of course, the size and quality of a $100,000 real estate house in the wealthiest municipality differs significantly from the size and quality of real estate purchased in an area where the median value is much less.
One factor not addressed in this IssuesPA review - the level and quality of services provided by each community. And that’s a factor not to be ignored, especially as a quality of life issue.
What’s it all mean?
Property taxes as a whole aren’t especially burdensome compared to other states. However, their impact varies widely within Pennsylvania. That makes it difficult to assess the actual burden in Pennsylvania. And that’s why local tax reform in Pennsylvania is easier said than done. Difficult? Yes. Impossible? No.
Total Property Tax* Burden for a House of Median Value
Selected Municipalities in Pennsylvania
| Munic. |
Median
Housing Value |
Common Level
Ratio |
Total Tax
Rate in Mills |
Total Tax
Burden |
| Philadelphia |
$61,000 |
31.4% |
85.35 |
$1,634.79 |
| Pittsburgh |
$60,700 |
94.0% |
29.41 |
$1,678.08 |
| Lewisburg |
$102,400 |
17.5% |
109.45 |
$1,961.34 |
| Allentown |
$77,000 |
46.2% |
54.72 |
$1,946.61 |
| Honesdale |
$87,000 |
9.0% |
233.00 |
$1,824.39 |
| Johnstown |
$36,500 |
16.1% |
163.04 |
$958.10 |
| Reading |
$45,000 |
93.5% |
31.49 |
$1,324.94 |
| Newtown |
$233,000 |
3.8% |
400.85 |
$3,549.13 |
| Hanover |
$97,300 |
90.0% |
22.30 |
$1,952.81 |
| Edgewood |
$105,300 |
94.0% |
29.01 |
$2,871.47 |
| Meadville |
$70,900 |
35.3% |
67.45 |
$1,688.12 |
| Lock Haven |
$74,800 |
29.1% |
83.93 |
$1,826.89 |
Total Property Tax* Burden for a $100,000 Home
Selected Municipalities in Pennsylvania
| Munic. |
Housing Value |
Common
Level Ratio |
Total Tax
Rate in Mills |
Total Tax
Burden |
| Philadelphia |
$100,000 |
31.4% |
85.35 |
$2,679.99 |
| Pittsburgh |
$100,000 |
94.0% |
29.41 |
$2,764.54 |
| Lewisburg |
$100,000 |
17.5% |
109.45 |
$1,915.38 |
| Allentown |
$100,000 |
46.2% |
54.72 |
$2,528.06 |
| Honesdale |
$100,000 |
9.0% |
233.00 |
$2,097.00 |
| Johnstown |
$100,000 |
16.1% |
163.04 |
$2,624.94 |
| Reading |
$100,000 |
93.5% |
31.49 |
$2,944.32 |
| Newtown |
$100,000 |
3.8% |
400.85 |
$1,523.23 |
| Hanover |
$100,000 |
90.0% |
22.30 |
$2,007.00 |
| Edgewood |
$100,000 |
94.0% |
29.01 |
$2,726.94 |
| Meadeville |
$100,000 |
35.3% |
67.45 |
$2,380.99 |
| Lock Haven |
$100,000 |
29.1% |
83.93 |
$2,442.36 |
* Includes county, school, and municipal rates
Sources: U.S. Bureau of the Census and Pennsylvania Department of Community and Economic Development
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