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Commonwealth Forum

Should Pennsylvania Abolish the Property Tax for Schools?

In November 2015, the Pennsylvania Senate narrowly failed to pass legislation 
abolishing the local school property tax and replacing it with state revenues raised 
by higher income and sales tax rates and the extension of the sales tax to a range 
of goods and services now exempt. The legislation, supported by dozens of citizen 
tax reform groups across Pennsylvania, was defeated 25–24 when Lieutenant 
Governor Michael Stack cast a tie-breaking vote against an amendment embody-
ing the changes.

State Senators David Argall and Judith Schwank were principal sponsors of 
the legislation and vowed to continue the fight. Indeed, legislation to replace, re-
form, and reduce the property tax, particularly for schools, has been proposed and 
debated for decades, and some relief measures have been enacted, but the tax 
remains the principal levy to fund schools in Pennsylvania and in most states. 
Citizens in Pennsylvania and nationally consistently tell pollsters that it is the 
worst tax, and few if any elected officials will defend the levy, except on the prag-
matic grounds that replacing it would require unrealistically large increases in 
state taxes.

Commonwealth invited Senator Argall, chair of the Senate Republican Policy 
Committee, and Jon Hopcraft, the committee’s executive director, to summarize 
the argument that the tax is an antiquated and unfair levy and should be abol-
ished. We invited Dartmouth College economist William A. Fischel, a nationally 
recognized expert who attended Pennsylvania public schools, to summarize his 
argument that, compared to statewide taxes, the local levy provides voters—even 
in households without schoolchildren—with stronger incentives to support high-
quality public schools.



Tax Policy 2

Yes, Abolish the Property Tax: It Is the Worst Tax 

for Schools

David G. Argall
Jon Hopcraft

At the start of his career in 1890 at Columbia University, Edwin Selig-
man deemed the property tax “the worst tax known in the civilized 
world” (Brunori et al. 2006). One hundred twenty-six years later, 

Seligman’s declaration would be met with raucous applause at town hall 
meetings across much of Pennsylvania.

The property tax is one of the oldest taxes in history—Athens levied a 
land tax in 596 bc (Jennings 2015). In 1982, former Pennsylvania Senate 
Majority Leader John Stauffer hypothesized that the first complaint about 
real estate taxes was likely submitted in Athens in 596 bc.

Article III, §14 of the Pennsylvania Constitution requires, “The General 
Assembly shall provide for the maintenance and support of a thorough and 
efficient system of public education to serve the needs of the Common-
wealth.”

We would challenge anyone today to argue that Pennsylvania’s current 
school property tax system actually promotes a “thorough and efficient sys-
tem of public education.”

Think what has changed in Pennsylvania education since the first school 
property tax was enacted in the 1830s: Teachers are no longer paid partly in 
vegetables, our children no longer learn in one-room schoolhouses, teachers 
are much better educated, and students have moved from chalk and slate to 
textbooks and computers, but taxpayers still pay for public education 
through an outmoded, archaic, and unfair property tax.

Today, Pennsylvania school districts receive most of their funding from 
local property taxes with the state and federal governments contributing 
approximately 45 percent. Again, let us quote the late Senator Stauffer, who 
served in the Pennsylvania General Assembly from 1965 to 1988 and 
summed it up best: “Although [the property tax’s] use has become nearly 
universal, it is the most unfair, fastest-rising and most capricious tax. Prop-
erty tax assessments and reassessments have become bywords for political 
manipulation.” According to the input we have received at countless town 
hall meetings, the situation has not improved since Senator Stauffer’s unsuc-
cessful efforts to reform the school property tax system in the 1980s.

This debate has gone on for decades in the Pennsylvania General As-
sembly, with the key question being “What is the best way to fund our public 
schools?”

In 1953, Governor John Fine enacted the state Sales and Use Tax at 1 per-
cent. While this tripled state aid for education, it failed to kill off school 



3 

property taxes (PHMC 2015a). In 1971, Governor Milton Shapp won a long-
fought battle with the legislature and created the state income tax at 2.3 
percent, dubbed the “Emergency Income Tax.” Shapp increased aid to public 
schools and also signed a bill into law creating the Pennsylvania State Lot-
tery with the intent to provide property tax relief to senior citizens (PHMC 
2015b), but it failed to kill off the school property tax. In 2004, Governor Ed 
Rendell legalized casino gaming with a portion of the revenue dedicated 
toward property tax relief, but the hated school property tax continued to 
grow. In 2006, the approval of Act 1 tied allowable school property tax in-
creases to inflation for the first time. The exemptions in Act 1, however, have 
allowed school districts to raise property taxes above the Act 1 index. In 
2014, the state granted exceptions to 164 public schools across the Common-
wealth to raise their property taxes above the Act 1 index (Frantz 2014). 
Since 2008, nearly one-third of the state’s five hundred public school districts 
annually received exceptions from the state to raise taxes above the Act 1 
limit (Welton 2015).

The pattern over the last six decades is clear—any temporary tax be-
comes permanent and any tax relief effort is temporary. Because of the state 
government’s inability to prevent school property taxes from rising each 
year, the calls to eliminate—not reform—this hated tax continue to grow 
louder each year.

Why do people across Pennsylvania hate the school property tax? Here’s 
one major reason: From 1993–1994 to 2012–2013, while the average annual 
regional consumer price index increased approximately 2.5 percent, the an-
nual average school district property tax increased by nearly double the in-
flation rate at 4.9 percent. In other words, over that period, as Figure 3.1 in-
dicates, the consumer price index cumulatively increased by 61 percent while 
the school property tax increased by 146 percent (Independent Fiscal Office 
2013). The annual increases to school property taxes continue to outpace any 
other economic indicator despite Act 1 limitations. This is why so many 
people show up at town hall meetings across Pennsylvania to demand the 
elimination of school property taxes. Tweaking this hated tax or reforming 
this unfair and archaic system is not what people are requesting. They are 
demanding its complete elimination.

Article VIII, §1 of the Pennsylvania Constitution requires, “All taxes 
shall be uniform, upon the same class of subjects, within the territorial lim-
its of the authority levying the tax, and shall be levied and collected under 
general laws.” The subjective nature of the school property tax flies in the 
face of the uniformity clause.

Today, property owners are subject to higher property taxes based on a 
variety of outmoded factors, including when the property was purchased, 
upgrades to the interior and/or exterior of a dwelling, reverse appeals, addi-
tions to the dwelling, changes to the productive use of the land, among sev-



4

eral others factors. Cherry-picking homeowners based on the sale of or up-
grades to the property not only discourages individuals from purchasing 
property in certain school districts but also removes any incentive to im-
prove properties because of the threat of future tax increases. The school 
district property tax is, at best, only remotely tied to an individual’s ability 
to pay. Is this really how we want to fund the education of Pennsylvania’s 
students in the twenty-first century? The only way to eliminate the unfair-
ness of the school property tax system is to kill it off once and for all.

The plan to eliminate school property taxes in Pennsylvania was first 
developed and drafted by more than seventy grassroots taxpayer advocacy 
groups from across the state, known as the Pennsylvania Coalition of Tax-
payer Associations. The coalition brought us a plan that would eliminate—
not reduce—school property taxes in Pennsylvania by shifting to an in-
creased Personal Income Tax (increasing the rate from 3.07 percent to 
4.95 percent) and an increased and expanded Sales and Use Tax (increasing 
the rate from 6 percent to 7 percent and broadening the tax base). Each year, 
school districts would receive a cost of living adjustment tied to the State-
wide Average Weekly Wage. The plan would also allow school districts to 
raise additional revenue through a local Personal Income Tax or Earned 
Income Tax increase contingent on voter approval. To put that in perspec-
tive, thirty-four other states require school districts to receive voter approval 
to levy or increase the local tax rate (Paul 2015).

Opponents frequently argue that income and sales taxes are too volatile 
for school funding. They usually fail to mention, however, that Pennsylva-
nia’s overall state budget receives over 70 percent of its revenue from the 
Personal Income Tax and Sales and Use Tax. Why should we require school 

3.00

146% growth

61% growth

School property tax collections
Regional CPI

2.50

2.00

1.50

1.00

0.50

0.00G
ro

w
th

 in
de

x 
w

ith
 1

99
3–

19
94

 v
al

ue
s a

t 1
.0

19
93

–19
94

19
95

–19
96

19
97

–19
98

19
99

–20
00

20
01

–20
02

20
03

–20
04

20
05

–20
06

20
07

–20
08

20
09

–20
10

20
11

–20
12

Figure 3.1 Historic trends in school property tax collections and regional consumer price 

index. (Data Source: Independent Fiscal Office 2013.)



5 

districts to depend on hated and unfair property taxes when the state has 
long since decided that the sales and income taxes are much fairer and more 
appropriate taxes to meet our needs?

The plan created by the Pennsylvania Coalition of Taxpayer Associations 
is a shift from an unfair, archaic school property tax to a hybrid income and 
sales tax–based approach. When Pennsylvania voters are asked, they agree 
with this concept. Here’s a sampling of the polling data: Harper Polling de-
termined that Pennsylvanians believe that the property tax is the worst tax 
in Pennsylvania (50 percent)—eclipsing the combined dislike of income 
(27 percent) and sales (14 percent) taxes (Harper Polling 2015). Local tax 
reform continues to be a key priority statewide, narrowly trailing education 
funding as the top issue for Pennsylvania voters (Klinger 2015). During a 
telephone town hall event on October 6, 2015, with Berks and Schuylkill 
County residents, participants overwhelmingly supported elimination 
(81 percent) over reduction (11 percent) and caps on future growth (8 per-
cent). KQV Radio in Pittsburgh in April of 2012 found that 85 percent of 
their listeners support a plan to eliminate school property taxes; the York 
Dispatch in May of 2012 asked a similar question, with 73 percent support of 
complete elimination; the Easton Express Times surveyed readers in March 
of 2015 asking about supporting a state budget deal or school property tax 
elimination, with 84 percent supporting the latter.

Figure 3.2 Inside view of the Pennsylvania State Capitol rotunda. (Source: Photo by 

Bestbudbrian, courtesy of Wikimedia Commons.)



6

This proposal, Senate Bill 76 and House Bill 76, would change our ar-
chaic school property system to one more in line with what taxpayers can 
afford to pay. Property owners would no longer bear the primary burden of 
funding public schools. Utilization of the income and sales tax will broaden 
the tax base, creating fairness and uniformity in taxation. Urban areas with 
population out-migration would no longer be tied to an eroding tax base for 
future revenue needs. Instead, more than 12.7 million Pennsylvanians plus 
tourists and other visitors would contribute to the state’s public education 
system.

After a comprehensive review, the Pennsylvania Independent Fiscal Of-
fice determined that eliminating school property taxes would provide the 
largest relative tax cut to retired homeowners and increase disposable in-
come for homeowners (Independent Fiscal Office 2012). Seniors and home-
owners of all ages continue to be the strongest advocates for this legislation.

When the plan was first introduced in the state Senate in 2011, it gar-
nered the support of roughly one-quarter of the Senators. After considerable 
grassroots lobbying across Pennsylvania, the number of Senate cosponsors 
has doubled. The plan was reintroduced in 2013 by fourteen Republicans and 
eleven Democrats, and again in 2015 with one-half of the Senate cosponsor-
ing the measure. On November 23, 2015, the Senate debated this proposal 
for the first time in history. The result was a 24–24 tie vote, which was then 
defeated by the lieutenant governor’s vote against the measure.

How can we finally resolve this decades-long debate and eliminate our 
archaic school property tax system? We are now meeting with the propo-
nents and opponents of the measure to find ways to improve the bill. Every 
day, we are searching for that one additional vote that we need to secure 
passage in the Senate and send it to the House for its consideration.

We now face a unique window of opportunity in Harrisburg. Franklin 
and Marshall College Professor G. Terry Madonna and consultant Michael 
Young believe that this issue could unite—not further divide—state govern-
ment leaders during this era of extraordinary partisanship in Harrisburg. In 
an often quoted column titled “RIP: The School Property Tax,” Madonna 
and Young (2015) wrote:

Pennsylvania’s property tax, like property taxes in many other states, 
is a fossilized artifact from the 19th century that faltered badly in the 
20th century and failed spectacularly into the 21st century. . . . Now 
in the 21st century, talking about “reforming” the 19th century prop-
erty tax really is just rearranging the deck chairs on the Titanic long 
after the iceberg has been hit. The property tax cannot be reformed—
but it can be abolished. . . . Both sides really want the same thing 
here—a sane tax system in support of a stable revenue source for 
schools. Realizing that comity of interest is half the journey. Getting 



7 

rid of the property tax means Wolf wins, the GOP wins—and most 
important of all, the long-suffering taxpayers of Pennsylvania win.

Homeownership has been the bedrock of the American Dream, but how 
can one achieve true homeownership when you are merely renting it from a 
school district? Eliminating the 1830s school property tax system and re-
placing it with a broader, fairer, and more equitable system will not only 
remove one of the biggest hurdles to achieving the American Dream; it will 
finally bring Pennsylvania’s public education financing system into the 
twenty-first century.

If you do not believe us, come with us to our next town hall meeting. The 
constituents of the 29th Senatorial District would love to share their thoughts 
with you on this issue.

REFERENCES
Brunori, David, Richard Green, Michael Bell, Chanyung Choi, and Bing Yuan. 2006. 

“The Property Tax: Its Role and Significance in Funding State and Local Government 
Services.” George Washington Institute of Public Policy Working Paper 27. Available 
at https:// gwipp .gwu .edu/ files/ downloads/ Working _Paper _027 _PropertyTax .pdf.

Frantz, Jeff. 2014. “Pa. Granted Exceptions Allowing 164 School Districts to Raise Prop-
erty Taxes More than 2.1 Percent.” PennLive, May 2. Available at http:// www 
.pennlive .com/ midstate/ index .ssf/ 2014/ 05/ school _property _tax _act _1 _exec .html.

Harper Polling. 2015. “Pennsylvania Statewide Poll.” Available at http:// harperpolling 
.com/ polls/ pennsylvania -statewide -poll -May -2015.

Independent Fiscal Office. 2012. “Analysis of HB 1776 and SB 1400 of 2012.” Available 
at http:// www .ptcc .us/ pdf/ ifo _property _tax _analysis _final _public _release _092512 
.pdf.

———. 2013. “Analysis of Proposal to Replace School Property Taxes: House Bill 76 and 
Senate Bill 76 of 2013.” Available at http:// www .ifo .state .pa .us/ getfile .cfm ?file = / 
Resources/ Documents/ SR2013 -07 .pdf.

Jennings, Marianne M. 2015. Real Estate Law. 11th ed. Boston: South-Western College.
Klinger, Jason. 2015. “Franklin and Marshall College Poll: Voters Support Medical 

Marijuana, Suspension of Death Penalty.” June 18. Available at http:// www .fandm 
.edu/ news/ latest -news/ 2015/ 06/ 18/ franklin -marshall -college -poll -voters -support 
-medical -marijuana -suspension -of -death -penalty.

Madonna, G. Terry, and Michael L. Young. 2015. “Politically Uncorrected: RIP: The 
School Property Tax.” PoliticsPA, March 24. Available at http:// www .politicspa 
.com/ politically -uncorrected -rip -the -school -property -tax/ 64671/.

Paul, James. 2015. “For Property Tax Relief, Give Voters Control.” Commonwealth 
Foundation, November 13. Available at http:// www .commonwealthfoundation .org/ 
policyblog/ detail/ for -property -tax -relief -give -voters -control.

PHMC (Pennsylvania Historical and Museum Commission). 2015a. “Governor John 
Sydney Fine.” August 26. Available at http:// www .phmc .state .pa .us/ portal/ com 
munities/ governors/ 1951 -2015/ john -fine .html.

———. 2015b. “Governor Milton Jerrold Shapp.” August 26. Available at http:// www 
.phmc .state .pa .us/ portal/ communities/ governors/ 1951 -2015/ milton -shapp .html.



8

Welton, Allison. 2015. “What Is Act 1 and How Did It Impact Property Taxes and School 
Funding?” Keystone Crossroads, June 22. Available at https:// whyy .org/ articles/ what 
-is -act -1 -and -how -did -it -impact -property -taxes -and -school -funding.

No, Keep the Property Tax: It Is the Best Tax 

for Schools

William A. Fischel

The local property tax is an important part of funding public school 
systems in most states. It should be clear from the outset that it would 
be unwise to rely entirely on local taxes of any sort to fund a system 

of public schools. Some school districts contain a disproportionate number 
of poor and disadvantaged students, and such districts may need state as-
sistance to give their children an adequate education. State mandates for 
special-needs students should also be accompanied by funds to pay for the 
additional expense. But aside from these exceptions, a properly and fairly 
administered system of local property taxation gives local voters—even 
those without school-age children—the right incentives to provide a thor-
ough and efficient education.

The Basic Argument for Property Taxes
Here is the basic economic argument, which is a distillation of an important 
paper by Stanford’s Caroline Hoxby (1999). Suppose that the local school 
superintendent, after consulting with principals and teachers, decides that 
the local high school needs to hire a group of teachers to teach in a newly 
created science, technology, engineering, and math (STEM) program. The 
voters are asked, directly in a referendum or indirectly through the school 
board, to finance this program with an increase in local property taxes.

In most communities, almost two-thirds of the voters will not have any 
direct interest in this because they have no children in schools (Kurban, Gal-
lagher, and Persky 2012). An increase in property taxes will seem quite un-
palatable to them. Considered in isolation, the tax increase would lower their 
home values (Do and Sirmans 1994).

But the superintendent points out that the STEM program will make the 
school district more attractive to families with school-age children. If the 
STEM program has this effect, it will raise the value of existing homes, 
which offsets the adverse effect of the property tax rise. This will apply even 
to voters who currently have no children in school, as long as their homes 
could be purchased by a family with children. If the offsetting rise is greater 
than the reduction caused by the tax, most voters would regard this as a 
desirable program. And from an economic standpoint, a net gain in the 



9 

value of homes is an indicator that the program is efficient (Brueckner 
1982).

It also follows that if there are no gains in home values from the pro-
gram, or there are net losses, then the project is inefficient—the costs are 
registered as being less than the benefits. In this case, local property taxation 
provides incentives to reject boondoggles, since the net effect of the tax in-
crease and the misconceived project will reduce home values. Local property 
taxation encourages local voters and their school boards to accept cost- 
effective projects and reject those that are losers in the eyes of home buyers.

That is the basic theory: Local property taxation subjects school spend-
ing to an effective benefit-cost test. The rest of this response briefly addresses 
evidence supporting this theory and adds a personal, Pennsylvania story to 
illustrate some overlooked advantages of local control.

Evidence from Economic Studies
The connection between school quality, property taxes, and local home val-
ues has been established in hundreds of studies, starting with a pioneering 
study of New Jersey cities by Wallace Oates (1969). Controlling for differ-
ences in location, size, and condition of the homes, Oates found that levels 
of school spending and property taxes affected—were “capitalized in”—the 
average value of houses in each community. He concluded that this provided 
a test for the efficiency of local decisions: “For an increase in property taxes 
unaccompanied by an increase in the output of local public services, the bulk 
of the rise in taxes will be capitalized in the form of reduced property values. 
On the other hand, if a community increases its tax rates and employs the 
receipts to improve its school system, the coefficients indicate that the in-
creased benefits from the expenditure side of the budget will roughly offset 
(or perhaps even more than offset) the depressive effect of the higher tax 
rates on local property values” (Oates 1969, 968).

Studies since then have shown that voters are actually motivated by the 
connection between their property’s value and the effects of the program 
(Sonstelie and Portney 1980). Homeowners are especially attuned to local 
public decisions because so much of their personal wealth is tied up in their 
homes (Fischel 2001). That local voters without children still support schools 
because of their beneficial effects on property values is well established (Hil-
ber and Mayer 2009).

The discipline of local funding from property taxes and the encourage-
ment it provides for local improvements explains why states that rely more 
on locally controlled property taxes have better schools. Thomas Husted and 
Larry Kenny (2000) found that states that reduced their reliance on local 
property taxes and increased state funds ended up with lower SAT scores 
and other indicators of overall educational quality. Joshua Hall (2007) con-
cluded that Ohio districts that relied more heavily on property taxation per-



10

formed better than those that got more money from the state. In my own 
review of a national study of SAT scores and state financing that ranked 
states from highest to lowest, I found that “in their top ten, none had more 
than 50 percent state funding. In the bottom ten, all but three states had 
more than 50 percent state funding” (Fischel 2002, 98).

The most dramatic and long-lasting experiment in school finance cen-
tralization—and rejection of local property tax financing—occurred in 
California in 1978. The state’s voters approved Proposition 13, which cut 
most property taxes by more than half and left funding for the public school 
system almost entirely up to the state (O’Sullivan, Sexton, and Sheffrin 1995). 
Because of this tax revolt and because the state’s court had severely con-
strained most local districts’ ability to use local funds, California provides 
what economists call a “natural experiment” in school finance (Fischel 1989). 
It was “natural” in that Proposition 13 was sudden and unexpected by most 
state and local officials.

The results of this clean shift from local to state funding could not be 
more stark. Total spending declined, educational quality declined, and 
more-affluent families abandoned the system for private schools. Spending 
in the poorest districts was increased somewhat, but the gap in test scores 
between the affluent and poorer districts did not narrow at all (Brunner and 
Sonstelie 2006).

The local property tax also has the advantage of stability. In 2012 North 
Dakota voters were invited to eliminate the local property tax and substitute 
for it the state’s swelling revenue from oil extraction (fracking) taxes (Davey 
2012). The voters rejected this plan overwhelmingly, and it turned out to be 
a wise choice: Oil prices have since tumbled, and the state’s school spending 
would have suffered as well. Voters may not love the property tax when con-
sidered in isolation, but they appear to realize that it is a more dependable 
source of revenue for services they care about.

Local Control: A Family Story
As an economist, I have emphasized the economic benefits providing for 
public education through local taxation. It has a long history in America, 
and it flourished during the period in which the American high school be-
came the world leader in education (Goldin and Katz 2008). But local control 
of education through the property tax also has a less quantifiable aspect. 
Political scientists have mentioned the community-building aspects of local 
education finance. Alvin Sokolow observes, “In its traditional and relatively 
unlimited version, the property tax also contributes to representative de-
mocracy in two interconnected ways: (1) by giving locally elected officials the 
discretion to allocate resources in a fashion that represents community pri-
orities; and (2) by engaging citizen-taxpayers directly in the actions of gov-
ernment” (1998, 182). I illustrate this with a family story.



11 

I grew up in Lower Saucon Township, just outside of Bethlehem, Penn-
sylvania. The home my parents built and that my four siblings and I were 
raised in was then (in the 1950s) in a semirural area. The township schools 
were mostly remnants of one-room schools of the nineteenth century. Al-
though they were not run as traditional one-room schools (all ages in one 
room), most of them were “doubled up” with two grades per room.

Despite the antiquarian appeal of the system, my parents were not too 
pleased with this arrangement, and my mother persuaded my dad to run for 
the school board. Despite a retiring personality and a complete absence of 
campaign activity, he won the election. He and other new board members 
helped consolidate the elementary schools into a new facility that offered a 
much better education (one grade per classroom). After twelve years on the 
board, he declined to run again. One of my proudest moments for my dad 
was when a delegation of neighbors arrived one evening to try to persuade 
him to run again.

I would be projecting too much on this to say that Dad was motivated by 
a concern for property values. He did own a fair amount of land and paid 
property taxes on it, but his chief concern was for the education of his chil-
dren and that of other children in the township. The point I want to make is 
that this virtue does not run contrary to the financial incentives of a system 
that ties local schools to local property taxes. Had the state of Pennsylvania 
built and paid for all public schools from statewide taxes, it is more than 
possible that education would have progressed much more slowly.

Harvard economists Claudia Goldin and Larry Katz (2008) contrast the 
robust expansion of locally financed American education in the early twen-
tieth century to the lagging European system, which was centrally financed. 
In Europe, advances in education standards had to wait until a national con-
sensus was reached. In America, local school directors like my dad could 
seize the initiative and move the system ahead with only local approval. Such 
initiatives would be noticed by other districts, who would worry that they 
might fall behind (and have their home values decline). This benign compe-
tition results in more experimentation and keeps education in the forefront 
of public issues. The property tax as an institution helps make “doing good” 
match up with “doing well.”

NOTE
This article was previously published as “Commonwealth Forum: Should Pennsylva-
nia Abolish the Property Tax for Schools?” Commonwealth 18, no. 1 (2016). © 2016 The 
Pennsylvania Political Science Association. ISSN 2469-7672 (online). http:// dx .doi .org/ 10 
.15367/ cjppp .v18i1 .81. All rights reserved.

REFERENCES
Brueckner, Jan K. 1982. “A Test for Allocative Efficiency in the Local Public Sector.” 

Journal of Public Economics 19 (December): 311–321.



12

Brunner, Eric J., and Jon Sonstelie. 2006. “California’s School Finance Reform: An Ex-
periment in Fiscal Federalism.” In The Tiebout Model at Fifty, edited by William A. 
Fischel, 55–93. Cambridge, MA: Lincoln Institute of Land Policy.

Davey, Monica. 2012. “North Dakota Considers Eliminating Property Tax.” New York 
Times, June 11. Available at http:// www .nytimes .com/ 2012/ 06/ 12/ us/ north -dakota 
-voters -consider -ending -property -tax .html.

Do, A. Quang, and C. F. Sirmans. 1994. “Residential Property Tax Capitalization: Dis-
count Rate Evidence from California.” National Tax Journal 47 (June): 341–348.

Fischel, William A. 1989. “Did Serrano Cause Proposition 13?” National Tax Journal 42 
(December): 465–474.

———. 2001. The Homevoter Hypothesis: How Home Values Influence Local Government 
Taxation, School Finance, and Land-Use Policies. Cambridge, MA: Harvard Uni-
versity Press.

———. 2002. “School Finance Litigation and Property Tax Revolts: How Undermining 
Local Control Turns Voters Away from Public Education.” In Developments in 
School Finance, 1999–2000, edited by William J. Fowler, Jr., 77–128. Washington, 
DC: National Center for Education Statistics.

Goldin, Claudia, and Lawrence Katz. 2008. The Race between Education and Technol-
ogy. Cambridge, MA: Harvard University Press.

Hall, Joshua. 2007. “Local School Finance and Productive Efficiency: Evidence from 
Ohio.” Atlantic Economic Journal 35 (September): 289–301.

Hilber, Christian A. L., and Christopher Mayer. 2009. “Why Do Households without 
Children Support Local Public Schools? Linking House Price Capitalization to 
School Spending.” Journal of Urban Economics 65 (January): 74–90.

Hoxby, Caroline M. 1999. “The Productivity of Schools and Other Local Public Goods 
Producers.” Journal of Public Economics 74 (October): 1–30.

Husted, Thomas A., and Lawrence W. Kenny. 2000. “Evidence on the Impact of State 
Government on Primary and Secondary Education and the Equity-Efficiency 
Trade-Off.” Journal of Law and Economics 43 (April): 285–308.

Kurban, Haydar, Ryan M. Gallagher, and Joseph J. Persky. 2012. “Estimating Local 
Redistribution through Property-Tax-Funded Public School Systems.” National Tax 
Journal 65 (September): 629–652.

Oates, Wallace E. 1969. “The Effects of Property Taxes and Local Public Spending on 
Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hy-
pothesis.” Journal of Political Economy 77 (November–December): 957–971.

O’Sullivan, Arthur, Terri A. Sexton, and Steven M. Sheffrin. 1995. Property Taxes and 
Tax Revolts: The Legacy of Proposition 13. New York: Cambridge University Press.

Sokolow, Alvin D. 1998. “The Changing Property Tax and State-Local Relations.” Pub-
lius: The Journal of Federalism 28 (January): 165–187.

Sonstelie, Jon C., and Paul R. Portney. 1980. “Take the Money and Run: A Theory of 
Voting in Local Referenda.” Journal of Urban Economics 8 (September): 187–195.

Discussion Questions

1. What would be the benefits of eliminating the property tax in
Pennsylvania? Who would the change benefit the most?



13 

2. What sources of revenue would replace the property tax if it were
eliminated? Why do Argall and Hopcraft argue that these funding 
mechanisms would be better for education?

3. Why does Fischel argue that the property tax is the best way to
fund education?

4. How can Fischel look at the same funding system as Argall and
Hopcraft and reach a completely different conclusion?

5. Who should be most responsible for funding education in Penn-
sylvania? The state or local governments?

From Pennsylvania Politics and Policy: A Commonwealth Reader, Volume 2. Edited by
Michelle J. Atherton and J. Wesley Leckrone (Philadelphia, Temple University Press,
2019).




