The real property tax accounts for over three-quarters of local taxes for Pennsylvania's school districts, by far the largest contributor. The earned income tax, the second largest source, remains only a limited portion of the total for two reasons. First, most school districts must equally share the tax proceeds with municipal governments. Second, the tax rate is capped at one percent with a few exceptions. This high dependence on property taxes means that when school districts need additional revenue they must increase the property tax rate.
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