Local Tax Reform
education project
Influence of the Tax Base
The size of the tax base can have a major influence on the size of real property tax rates; a larger tax base means tax rates can be lower to raise the same amount of total revenue as a higher tax rate in a jurisdiction with a smaller tax base. A study of Pennsyvlania school districts, conducted in 1992, examined the role of the tax base on tax rates, and found that this does influence the size of real property tax rates in Pennsylvania. In Table 2 below, compare how the Market Value per Pupil (a common measure of the size of the tax base) relates to the Local Tax Effort (a fancy way of saying "tax rate"),and Real Estate Taxes per Pupil..
Table 2: Influence of Tax Base on School District Real Estate Taxes in Pennsylvania (excludes Pittsburgh and Philadelphia), 1990-91 |
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1990-91 School Districts Sorted by Property Wealth per Pupil Decile |
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| Lowest | Second | Third | Fourth | Fifth | Sixth | Seventh | Eighth | Ninth | Highest | |
| Market value per Pupil | $65,138 | $80,862 | $93,196 | $106,757 | $124,741 | $143,107 | $167,884 | $198,236 | $238,464 | $368,639 |
| Personal income per Pupil | $39,968 | $48,761 | $54,924 | $61,295 | $71,469 | $74,557 | $82,539 | $97,877 | $102,623 | $155,824 |
| Real Estate taxes per Pupil | $1,149 | $1,429 | $1,543 | $1,734 | $2,033 | $2,411 | $2,732 | $3,238 | $4,056 | $5,208 |
| Local Tax Effort (mills) | 23m | 24m | 23m | 21m | 21m | 21m | 20m | 20m | 19m | 16m |
| Total spending per Pupil | $4,667 | $4,904 | $4,982 | $4,996 | $5,191 | $5,330 | $5,524 | $5,980 | $6,600 | $7,354 |
Note that the average tax rate (Local Tax Effort) decreases as property wealth per pupil increases. Poorer districts (with a smaller market value per pupil) generally end up with higher tax rates and yet raise less tax revenue per pupil than do more well-to-do districts.
source: National Conference of State Legislatures, 1992.
If you have questions about Pennsylvania local taxes and local tax reform, contact Tim Kelsey or your local Penn State Cooperative Extension office.
Webpage and content developed by Tim Kelsey, Associate Professor of Agricultural Economics, Department of Agricultural Economics and Rural Sociology, Penn State University
@copyright 1999 Page last updated: 02/06/07
Disclaimer: The Pennsylvania Local Tax Reform website is strictly intended to help you know and understand more about local taxes and the tax options available to jurisdictions in Pennsylvania. The material is general and educational in nature. It is not intended to be legal advice, nor to replace the need for legal advice. If legal advice is what you need, you are encouraged to seek the aid of a competent professional in your area.