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Taxes

Day 38 of the Pennsylvania state budget impasse, and neither side is budging.

Issues keeping apart Democratic Gov. Tom Wolf and the Republican Legislature are as deep as the chasm of education funding shortfalls on which Wolf staked his campaign for governor and as entrenched as opposition to Marcellus shale extraction tax, liquor store privatization and the debate over the best way to solve the public pension crisis.The differences are so sharp that it seems improbable the two sides can agree on anything.But, in fact, they agree in one area, and it's an area of great potential for Pennsylvanians.According to a report released last week by the Keystone Research Center, property tax reform holds promise as the one topic on which the two sides share common ground.The goal that has remained elusive for three decades in Pennsylvania could be the catalyst to break the budget logjam, a guiding light to compromise and consensus.The report comes from a study comparing House Bill 504, the property tax plan that recently passed the House, and Wolf's property tax relief proposal included in his budget plan. (The Keystone Research Center is part of the Pennsylvania Budget and Policy Center, a liberal think tank in Harrisburg.)"Gov. Wolf has been very explicitly positive about HB504 and this may be our best chance in a generation for bipartisan compromise and an opportunity to achieve something that has been a top legislative priority for Republicans for years," Stephen Herzenberg, executive director of the research center, said in a call with the media last week.Furthermore, Herzenberg said, school districts in some parts of the state where legislators have been opposed to property tax reform do "surprisingly well" under Wolf's plan, adding to the chance for what he calls "our best chance for bipartisan compromise on this issue in a generation."The Republican plan provides more relief to commercial and industrial properties, a higher share to wealthier suburban school districts and, in what Herzenberg called a "dollar-for-dollar" distribution, puts all $4.8 billion raised from the higher taxes back toward property tax relief.By contrast, Wolf's plan takes a portion of the proceeds from the higher taxes and applies it to the state's "structural deficit," leaving $3.8 billion toward property tax relief.Homeowners in school districts with less property wealth tend to do better under Wolf's plan statewide, although that is not the case with all districts.In low-income districts, Wolf's plan provides less direct relief than HB504 but provides more aid to address the inequities so the effect on schools would be the same or greater than under HB504.More important than the differences are the similarities. Both plans use the same basic mechanisms to provide property tax relief an identical increase in the personal income tax from 3.07 to 3.7 percent, and a slightly different increase in the state sales tax. Wolf's plan raises the sales tax to 6.6 percent but broadens it to apply to more goods and services, while HB 504 keeps the items subject to the sales tax as they are now but raises the rate to 7 percent.In both plans, the income and sales taxes in the first year are followed by property tax relief in the following year.The two proposals demonstrate that property tax relief is common ground on which to start building consensus.Our lawmakers, Wolf and legislators of both parties, should take a moment and realize their disagreements are not as important as this area in which they are close to agreement.This best chance for bipartisan compromise can be a starting point to reach an end to this ridiculous impasse that passes for government in Pennsylvania.The Delaware County Daily Times