Jeff Piccola, a Senate Republican vying for a chance to oust Gov. Ed Rendell in '06, proposed a plan to move the state away from regressive real-estate taxes and towards a flat consumer tax. Though the concept is good, the plan unduely targets real estate yet again. Consider the following:
Piccola bumps the Real Estate Transfer tax to 3%. Coupled with local transfer taxes levied at 2%, every house purchase will be taxed 5%. With average home costs around $100,000, thats $5,000 bucks.
Piccola makes the sales tax, lowered to 5.7%, cover professional services and necessities. Those of us in Allegheny and Philadelphia Counties will see the tax at 6.7%. An architect's invoice for $40,000 will cost $2,700.
These two items alone throw $7,700 onto the costs of building housing in urban Pennsylvania. An additional $10k in costs will squealch urban development, and severely impede suburban development... a huge employer in the Pittsburgh region. Coupled with increasing interest rates, Piccola's plan throws a bucket of cold water on housing sales, slowing a sluggish real-estate market. As for affordability of housing, current costs allow a family making $26k to buy a home in Pittsburgh. With Piccola's plan, the family better make over $30k if they think they're gonna buy a house. Future homebuyers, primarily young families, will be pushed into renting.
Methinks Piccola might be more worried about courting greedy seniors who hate to pay school taxes than young families that need every dime they can get. One thing is for sure, this plan will sell better on a Bocci Court at Silver Lake than it will in young working class neighborhoods. But what would you expect: tough shit kids, you don't vote.