The PA Legislature has targeted retiree’s income in the face of crushing inflation and a worsening economy, says columnist Dwight Weidman. Read his take on House Bill 13.
If there is something we can all count on, it is the talent of the PA legislature to do the wrong thing at the wrong time. I offer as an example 2019’s Act 77, which bollixed up the 2020 election.
Of course, the Republican legislative majority is scrambling to apply a band-aid to the Act 77 disaster with a bill that fixes nothing, but that is a topic for another column.
Of more immediate concern is a bill being planned for rollout that pretends to give Pennsylvanians a big break from school property taxes: Representative Frank Ryan’s HB13.
It is not a new bill; it was put forward in 2019. The bill was such a stinker that it died a well-deserved death that year.
Although information is scarce now and Ryan’s office is not answering its email, it appears that this year’s bill will be almost identical to the 2019 version, except for minor admin changes.
Last time I checked, a visit to the “Learn More About My Plan” link on Ryan’s website takes you to “Page Not Found”, so Representative Ryan probably figures his best chance for pushing this nearly 300 page monstrosity through quickly is to hide the details from us.
A new twist: Taxing retirement income
Ryan’s bill is not a tax relief bill. In fact, it establishes new taxes that add to our tax burden. The bill states it will eliminate school property tax, at least in its present form. It will replace those taxes with increased local income taxes, sales taxes, and — for the first time — a 4.92% tax on retirement income.
Ryan has said benefits equal to retirement contributions to IRA’s and 401K’s would not be subject to the retirement tax (they are taxed going in). But he has no answer to what happens to the benefits for thousands of Pennsylvanians retired under “defined-benefit” plans, whose contributions were taxed on the front-end, and will also be taxed on the back end.
This includes many Pennsylvanians retired from places like Letterkenny Army Dept, Tobyhanna Army Depot, Carlisle Barracks, and other DoD activities.
The proponents of Ryan’s bill, most of whom are undoubtedly the financial industry lobbyists who wrote it for him, try to say that “most” will be better off with all these new taxes; but it is impossible to see how.
Residents would pay an additional 1.85% local personal income tax to school districts (in addition to existing local taxes); and an additional 2% local sales tax added to the state’s tax with that increase going to districts countywide. Items such as clothing would also be subject to sales and use tax for the first time also.
It would also include a 4.92% retirement income tax (excluding Social Security). Of that, 1.85% would go to districts, with the rest going to the state’s general revenue fund.
The trade offs
The money seniors are currently paying in property taxes would be traded for the higher income taxes, Ryan said. But since income is variable, some people would end up paying more. Also, it is important to note that county property tax would NOT be eliminated.
The big problem with the bill: HB 13 has a “hold harmless” provision for the first three years. That means every district would be guaranteed to receive no less in revenue than it did in property taxes, with the difference covered by the taxpayers.
After that, if districts want more money, there would be a last-resort lending fund of $500 million. If that’s not sufficient, there’s the state-mandated financial recovery fund. But that will come with increases in those new local income taxes, since the state cannot incur debt.
In other words, although future increases will not be called “property taxes,” there will be increases in the local income taxes when the legislature raises the 1.85% ceiling; and the almost 5% tax on retirement is likely to increase also. All of this will leave us worse off than we were before; but that is just another day at the office for our Harrisburg crowd.
A disaster for seniors
Representative Ryan’s bill does not help anyone and is a disaster for senior citizens.
Some of our local legislators are no doubt supporting this disaster.
A few years ago, one of our representatives expressed a certain contempt for retirees as a group “that costs us the most;” so he is no doubt salivating over a chance to cash in on their hard-earned retirement benefits.
That all remains to be seen. But with rampant inflation affecting the prices of food, heat, medicine, and the other things on which senior citizens depend, it is almost criminal to even consider taking a chunk of their retirement check.
Shame on them!
Dwight Weidman is a resident of Greene Township and is a graduate of Shepherd University. He is retired from the United States Department of Defense. His career included assignments in Europe, Asia, and Central America. He has been in leadership roles for the Republican Party in two states; most recently serving two terms as Chairman of the Franklin County Republican Party. Dwight has been involved in web publishing since 1996 and is publisher of The Franklin County Journal. He has been an Amateur Radio Operator since 1988, getting his first license in Germany. He is a past volunteer with both Navy and Army MARS, Military Auxiliary Radio Service; and is also an NRA-Certified Firearms Instructor.