Senate Bill 76 Explained
Goal: Eliminate all school property taxes across the Commonwealth and replace those taxes with a combination of funding from the Personal Income Tax and the Sales and Use Tax.
The school property tax has been a primary source for school funding since the 1830s. The legislature cannot continue to “fix” or “reform” this archaic tax – that is why we are proposing a new education funding model that would promote economic growth and completely eliminate the school district property tax once and for all.
- Increase the Sales and Use Tax by one percentage point and broaden the base of the state sales tax to include more services and products. Necessities and business-to-business transactions will continue to be exempt from the sales tax. Revenue generated: $5.552 billion
- Increase in the state’s personal income tax from 3.07 percent to 4.34 percent. Revenue generated: $4.540 billion
- Include Property Tax Relief Fund – Transfers. Revenue generated: $526 million
Property tax baseline: $10.607 billion. Property tax replacement via SB 76, as mentioned above: $10.618 billion.
In 2012, after a thorough analysis, the Independent Fiscal Office found the original proposal, SB 1400, would leave a $1.509 billion gap in current public education funding.
Using the IFO report, we tweaked SB 1400 to achieve adequate school district funding:
- Increase the proposed PIT increase included in SB 1400 of 4.01 to 4.34 percent. This would generate an additional $1.179 billion in revenue.
- Currently, telecommunications is subject to the state Sales and Use Tax. SB 1400 accidentally omitted this service. Including it in SB 76 is would generate an additional $341 million in revenue.
The IFO report continues to explain:
- Retired homeowners realize a significant reduction in total taxes. (Page 21)
- The elimination of school property taxes increases the disposable income of property taxpayers. (Pages 17-18)
- Eliminating school property taxes will cause home values to increase, on average, by more than 10 percent statewide. (Page 23)