Pennsylvania Philadelphia Real Estate Tax Amendment (2019)

Pennsylvania Philadelphia Real Estate Tax Amendment
Election date November 5, 2019.
Topic Taxes and County and municipal governance
Status Not on the ballot
Type Constitutional amendment	Origin State legislature

The Pennsylvania Philadelphia Real Estate Tax Amendment was not on the ballot in Pennsylvania as a legislatively referred constitutional amendment on November 5, 2019.

The measure would have allowed Philadelphia, the state's only city of the first class, to increase its tax on real estate used for business purposes to a rate exceeding other real estate taxes if certain conditions were met. First, the increased tax on business real estate would not have been more than 15 percent higher than the combined rate of taxes on other real estate. Second, Philadelphia would have needed to decrease its taxes on wages and business profits so that increased revenue from the business real estate tax would be offset by an equivalent decrease in revenue from taxes on wages and profits.

As of 2018, Section 1 of Article VIII of the Pennsylvania Constitution, also known as the Uniformity Clause, required all taxes upon the same class of subjects be applied uniformly across the state.

The proposal, sponsored by Rep. John Taylor (R-177), was approved in the Pennsylvania Legislature as House Bill 1871 in 2016. The constitutional amendment needed to be approved one more time in each legislative chamber during the 2017-2018 legislative session to appear on the ballot. However, the constitutional amendment did not reach the floor of either chamber during the session.

Text of measure

Constitutional changes

See also: Article VIII, Pennsylvania Constitution

The measure would have added paragraph (vii) to Section 2(b) of Article VIII of the Pennsylvania Constitution. The following underlined text would have been added: Note: Hover over the text and scroll to see the full text.

§ 2. Exemptions and special provisions.

...

(b) The General Assembly may, by law:

...

(vii) Permit a city of the first class to impose taxes for the benefit of the city of the first class on real estate used for business purposes at a tax rate that exceeds the tax rate applicable to other real estate, in accordance with the following:

(A) So long as a rate variance is in effect, the combined rate of taxes on real estate used for business purposes imposed by the city of the first class or authorized by the city of the first class for its school district shall not vary by more than fifteen percent from the combined rate of taxes on other real estate imposed or authorized by the city of the first class.

(B) The General Assembly shall require the city of the first class to reduce the aggregate revenue from other taxes imposed for the benefit of the city of the first class both on businesses and any wage and net profits tax by the amount of any real estate tax revenues attributable to the variance.

Support

Supporters

The following legislators sponsored the amendment in the Pennsylvania Legislature:

• Rep. John Taylor (R-177)
• Rep. William Keller (D-184)
• Rep. Martina White (R-170)
• Rep. W. Curtis Thomas (D-181)
• Rep. Michael O'Brien (D-175)
• Rep. Michael Driscoll (D-173)
• Rep. Kevin Boyle (D-172)
• Rep. Edward Neilson (D-174)
• Rep. Robert Godshall (R-53)
• Rep. Mark Cohen (D-202)
• Rep. Rosita Youngblood (D-198)
• Rep. Pamela DeLissio (D-194)
• Rep. Chris Ross (R-158)
• Rep. Mary Jo Daley (D-148)
• Sen. Thomas H. Killion (R-9)

Arguments

• David Thornburgh, President and CEO of the Committee of Seventy, said, "Unless and until we remove that barrier, and the city’s wage tax is dramatically and fairly reduced, Philadelphia will continue to lag behind our competitors and the nation as a whole. Without a fundamental resetting of our competitive landscape, our prospects to escape the dubious distinction as the nation’s poorest big city are dim."
• Varsovia Fernandez, Senior Vice President at Customers Bank, stated, "This [amendment] will help Philadelphia lower its dependency on wage and business taxes and create a stronger climate for growth."

Background

Classification of cities in Pennsylvania

The amendment would have only applied to cities of the first class. As of 2018, Philadelphia was the state's only city of the first class. Cities in Pennsylvania were classified into four groups: First Class, Second Class, Second Class A, and Third Class. Population was the main criteria determining what category a city falls under. Cities with more than 1 million people were considered First Class. Philadelphia, with an estimated population of 1,567,442 in 2015, was a first-class city. Cities with populations between 250,000 and 1 million were considered Second Class. Pittsburgh was the state's only second-class city. The city's population was estimated at 304,391 in 2015. Cities with populations between 80,000 and 250,000 were allowed to elect to be considered Second Class A. Only Scranton was classified as such. All cities with fewer than 250,000 that had not elected to be Second Class A were Third Class.

As of 2018, Pennsylvania had a classification system for cities due, in part, to Section 1 of Article VIII of the Pennsylvania Constitution or the Uniformity Clause.

Uniformity Clause

As of 2018, Section 1 of Article VIII of the state constitution prohibited the state from levying taxes specific to one group of people or one location. By utilizing a classification system, Pennsylvania could levy taxes specific to certain classes. For example, Philadelphia was a class-one city. The constitution prohibited the state from levying a tax on Philadelphia alone. However, the constitution allowed the state to authorize a tax on first-class cities, of which Philadelphia was the only one.

Below is Section 1 of Article VIII, also known as the Uniformity Clause, of the Pennsylvania Constitution, as written in 2018:

	Text of Section 1: Uniformity of Taxation All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.

Path to the ballot

See also: Amending the Pennsylvania Constitution

In Pennsylvania, an amendment can go on the ballot after just one legislative session, but only if the Pennsylvania Legislature declares an emergency. In the absence of an emergency, the amendment must be considered in two separate legislative sessions.

On June 27, 2016, the Pennsylvania House of Representatives passed House Bill 1871. The bill received 170 "yea" votes and 25 "nay" votes in the lower chamber. The Pennsylvania Senate approved HB 1871 on July 1, 2016. The bill received 47 "yea" votes and 2 "nay" votes in the upper chamber. The first approval was filed with the Pennsylvania Secretary of State on July 11, 2016. The legislature needed to approve the amendment again during the 2017-2018 legislative session for it to appear on the ballot. However, neither chamber of the legislature voted on the amendment during the 2017-2018 session.

House vote

June 27, 2016

Pennsylvania HB 1871 House Vote
Result		Votes	Percentage
a Yes		170	87.18%
No		25	12.82%

Senate vote

July 1, 2016

Pennsylvania HB 1871 Senate Vote
Result		Votes	Percentage
a Yes		47	95.92%
No		2	4.08%

See also

Suggest a link

• Pennsylvania 2019 ballot measures
• 2019 ballot measures
• Pennsylvania Legislature

External links

• House Bill 1871