Saturday, October 22, 2016

Cinfici’s Letter to the Editor of the Reading Eagle Re: the Reading School Board’s Tax Increase

           The Reading Eagle published my letter to the Editor today regarding the Reading School Board of Directors’ increase of the Reading School District’s school real estate taxes for the 2016-2017 fiscal year. Here is a link to the letter:

The Eagle had recently reported a study by the Berks County Planning Commission that school real estate taxes are higher in Berks County than in every neighboring county, which I believe explains why Berks has been the lead county, through its bipartisan legislators, to advocate for the elimination of school real estate taxes and replacement with an increase and broadening of sales taxes.  The article reminded me of Reading’s tax increase. 

            My letter was in direct response to the report in the Eagle in June that minimized the effects of the School Board’s tax increase by claiming the increase would only amount to about $10.00 for a home with the median value in Reading that receives the homestead exemption.  I noted most properties are not owner-occupied homes eligible for the exemption and some that are do not receive it; most properties are either commercial or are residential rental units.  Furthermore, I noted any increase in the millage increases the baseline for future tax increases, like compounding interest.  Tax increases are limited by Pennsylvania law to a certain percentage, with exceptions.  The June report had stated the increase was the third in the last 15 years, which was true, but misleading.  The Reading School Board raised the rate to the maximum amount—for the second time in the last three years and third time in the last five. 

            The Eagle’s June report also misleadingly compared Reading to other Berks County school districts by reporting Reading’s school real estate taxes as the lowest in the county, without reporting that Reading levies an additional one percent income tax to make the comparison more accurate.  In addition, I noted Reading residents pay higher municipal taxes (the City and School District are coterminous) than those of other county municipalities, meaning the overall tax burden is higher for those that reside in Reading

            In the letter, I observe the effects of a tax increase on businesses and the resultant economic harm, as well as the decrease in property values because of the increase in the cost of ownership, which, in turn, leads to lower property assessments and less taxable revenue—a point of diminishing return.  

           I had to address multiple points and squeeze some advanced tax theory into only 200 words, but am grateful to have the opportunity with this forum to expound a little.

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