Lessons for Economic Reform Based on Pennsylvania’s Experiences with the Two‐Tiered Property Tax

Abstract

Abstract. Although economic theory indicates that the imposition of a two‐tiered property tax system facilitates urban revitalization, localities in most states have not been authorized to institute a two‐tiered property tax. The authority to implement such a tax is partially determined by a state constitution’s uniformity and equal protection clauses and tax rate ceilings. An analysis of these provisions reveals 23 states may establish a two‐tiered tax, but implementation in 20 of the states must await the passage of state‐enabling legislation. Because of the dearth of experience in enacting legislation and the absence of literature that provides guidance for securing its passage, the politics of enacting Pennsylvania’s 1998 statute are assessed. The case study clearly indicates that enabling legislation enjoys bipartisan support as well as the backing of urban and rural representatives. However, the legislation’s fate is primarily determined by the composition of local electorates and the political power of farm lobbies.