Thursday, November 10, 2005

Four steps to suicide for the Pennsylvania legislature.

Here is a brief summary of events related to the Pennsylvania legislature over the past five months:

1) Summer - 2005 - The Pennsylvania legislature (both parties) passed a very large legislative pay raise for themselves and appellate judges.

2) The resulting uproar among voters continues to this day. One Pennsylvania Supreme Court Justice was voted out of office two days ago in an unprecedented retention vote loss, even though repeal of the pay raise may be imminent.

3) Members of the legislature now cower in fear that the voters will remember the pay raise in 2006.

4) The legislature plans to vote on November 21 on a proposal to impose an average of $4,000 in higher taxes on the purchase and sale of homes in Pennsylvania.

The first three items are well known to Pennsylvania voters. The last item is not a joke. With their political lives virtually teetering on the edge of a cliff, some legislators will actually be stupid enough to support an increase in the realty transfer tax.

James Lileks once wrote that the worst campaign speech begins with the phrase, "let me explain why I voted to raise your taxes."

Referenda for tax increases regularly lose at the polls. Politicians who support tax increases are routinely thrown out of office. George Bush I was defeated in 1992 largely because he reneged on his "no new taxes" pledge.

In fact, the proposed tax increase could cost home sellers as much as $10,000 or more. Sellers will have to pay the tax twice if they are buying a new home to replace the home they are selling. The sellers will also be faced with the need to lower the price of their old home by several thousand dollars just so a buyer can afford the buyer's portion of the new taxes. The seller will still owe the seller's portion. The seller will then pay an additional transfer tax when he purchases his new home (unless he is smart enough to buy his new home in a different state).

Voting the responsible legislators out of office will be a small consolation if we face losses like those that are contemplated in the new tax. Contact your legislator before November 21st. Remind them that the primary election is only six months away - unless you have a few thousand dollars you don't mind throwing away.


The text of the proposed bill is here.

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