Tax Reform, Economic Development and Job Creation in Carbon County

By Robert Frycklund

Broad tax base diversification which reduces and/or eliminates reliance on residential taxes, combined with responsible commercial and industrial development, will create career opportunities and allocate the tax burdens fairly and equitably among people and businesses according to their abilities to pay and the benefits that they gain from living and doing business in Carbon County.

We need to diversify the tax base and make it more fair and equitable by taxing consumption and income rather than real estate, which is not necessarily a reflection of a homeowner's economic condition, since many responsible homeowners are retired, involuntarily unemployed or facing an unavoidable financial crisis brought about by a medical emergency or the death of a spouse. Responsible governments don't compound those hardships by taxing those people out of their homes.  We need to completely restructure the system to reduce taxes on private citizens who consume less by allocating those burdens fairly and equitably among people and corporations according to their individual abilities to pay and the benefits they've gained from living and doing business here.  Those who say it can't be done haven't been studying the right models. For example, take a look at the state of Arizona, where there are no real estate taxes, but those otherwise lost revenues are largely recaptured through personal property taxes on commercial and industrial equipment.  In effect, they're properly taxing property which generates income, and not real estate which does not.

On the consumption side, our current state sales tax rate is 6%.  As it stands right now, each one percent of that rate represents approximately $1.3 billion dollars in annual state tax revenues.  Governor Rendell has proposed the elimination of 74 sales tax-exempt items, essentially leaving only unprepared foods, clothing and prescription medications untaxed, while reducing the overall tax rate to 4%.  The Governor's office reports that this measure would contribute an additional $10 billion dollars per year to state revenues.  That's over one-third of the entire state budget, which is $29 billion this year.  It stands to reason that if we leave the sales tax rate at 6%, then we could be more selective about which exemptions should remain, and increase revenues from consumption, which is a much more fair and equitable measure of the ability to pay, to the point that we could realistically propose not just property tax relief, but perhaps even the elimination of residential real estate taxes altogether.   The flip side of this coin is economic development.  In one year, Carbon County's unemployment rate has grown from 8.3% to 11.2%.  We need to take immediate steps to reverse this trend.  We all have friends and neighbors who commute to jobs in other counties, and other states. Carbon County shouldn't settle for being a bedroom community, because the net effect of that is that we're exporting our tax revenues to other counties and other states, because those people are going to work and they're buying prepared food, buying gas, buying supplies and discretionary items and services outside Carbon County.  On a per-capita basis, more than one out of every four dollars that we spend on state and local taxes goes directly to another county or another state.  We don't have to accept that.  We have convenient access to I-80 and the turnpike, and a short drive to both New York and Philadelphia. We have vacancies in five existing industrial parks located in Keystone Opportunity Zones.  We have the capacity to welcome and host the rapidly-emerging technology and green energy industries, and we have the kinds of diverse, vibrant culture and activities which are necessary to attract not only employers, but the best and brightest employees as well.  By responsibly developing our under-utilized commercial and industrial corridors in Carbon County in a way that protects the resources and natural beauty that make our district such a great place to live, we will create not just jobs, but real careers with medical and retirement benefits, and at the same time, we will increase local tax revenues from those businesses and their employees, to reduce the burdens on those private citizens who earn and consume less.    Like it or not, taxes are a necessary part of a working, functional government.  But we can, and must, allocate those burdens fairly and equitably among people and businesses according to their abilities to pay and the benefits that they gain from living and doing business here in Pennsylvania, and right here, in Carbon County.

Robert Frycklund