Pennsylvania State Budget




Recent Issues

The Unintended Consequences of Wolf's Budget

APRIL 21, 2015 | Commentary by ELIZABETH STELLE

If the proposed sales tax expansion contained in Gov. Tom Wolf’s budget proposal becomes law, Louise Bell's nursing home costs will jump by $3,000—essentially adding a 13th month to her annual bill. That’s just one of the many unintended consequences of Wolf’s budget plan which—despite being sold as tax cut for middle-class families—would create few winners and many losers across every income level.

Gov. Wolf's Proposed Property Tax Shift

MARCH 24, 2015 | Policy Brief by NATHAN BENEFIELD

As part of his 2015-16 budget proposal, Gov. Tom Wolf has proposed using some revenue from increased state taxes for school property tax relief beginning in 2016-17. This policy brief examines more closely the proposed tax shift.

Natural Gas Severance Tax

MARCH 20, 2015 | Policy Points by COMMONWEALTH FOUNDATION

A severance tax must be considered in light of the state’s total tax structure. Pennsylvania taxes the natural gas industry in many ways that don’t exist in other drilling states. For example, there is no corporate income tax or personal income tax in Texas or Wyoming, and the corporate income tax in West Virginia is 6.5%, compared to Pennsylvania’s 9.99% rate.





Recent Blog Posts

IFO: Everyone Pays More Under Wolf Tax Shift

APRIL 24, 2015

The Independent Fiscal Office (IFO) released a new analysis of Gov. Wolf's tax proposals yesterday. What is their most interesting conclusion? Taxpayers in every income bracket will see a net tax increase. 

The table below breaks down the incidence of tax changes by 2018-19, the first full fiscal year in which all of Wolf's proposals would be in effect.

Tax Incidence for Pennsylvania Residents, FY 2018-19 
Net tax increase by household income under Wolf proposed budget, in millions
  Under $25,000 $25,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$250,000 More than $250,000
Tobacco $126 $149 $93 $80 $78 $26
Sales and Use $367 $616 $606 $512 $1,283 $721
Personal Income $29 $270 $303 $268 $713 $658
Property -$274 -$472 -$438 -$352 -$680 -$284
Philadelphia Relief -$58 -$77 -$61 -$48 -$100 -$64
Renter Rebate -$202 -$185 -$8 $0 $0 $0
Corporate Net Income -$25 -$45 -$41 -$35 -$87 -$75
Bank Shares $1 $2 $2 $2 $4 $4
Net Severance tax $44 $56 $47 $34 $60 $23
Total $8 $316 $503 $461 $1,271 $1,009
Source: Independent Fiscal Office: http://www.ifo.state.pa.us/resources/PDF/Revenue_Proposal_Analysis_April2015.pdf

The IFO offers another look at tax incidence excluding tobacco taxes—which impose a significant burden on lower-income households. If, for whatever reason, you wanted to exclude an analysis of the burden of tobacco taxes, the lowest income group (households earning less than $25,000) would see a net tax reduction, but taxpayers in every other income category would still see a net tax increase.

That is, middle class families will pay more, even after Wolf's promised property tax reductions.

This finding shouldn't be surprising. As we noted, using Gov. Wolf's own revenue projections, only 30 cents of every dollar collected in new state taxes during the first two years of the plan go to property tax relief. Even if we ignore the tax implications of the governor's first budget, in which families will pay higher state taxes before seeing any property tax reduction, Wolf's tax shift proposal raises twice as much revenue in new state taxes than it provides in school tax relief.

It should also be noted that Wolf's tax shift provides an arbitrary system of doling out money to school districts. The amount of money your family could get in property tax relief depends—with quite dramatic differences—on where you live.

The IFO analysis delves specifically into the unique case for Philadelphia. Under Wolf's plan, Philadelphia, unlike any other school district, would see a reduction in its local cigarette tax, sales tax and wage tax along with property tax reductions. 

Gov. Wolf has been trying to sell his budget by making a remarkable claim: Everyone will receive these great benefits, but only the wealthy will have to pay for them. The IFO analysis demonstrates otherwise. Not only will the wealthy pay, but low-income and middle class families alike will be hit hard under the governor's plan.

posted by NATHAN BENEFIELD | 08:32 AM | Comments

Taxpayer Protection Act Advances in the Senate

APRIL 21, 2015

In the face of Governor Wolf’s proposed $4.5 billion tax increase, a group of Senate lawmakers are offering an alternate vision for Pennsylvania—one of limited government and economic prosperity.

Today, the Senate Finance Committee passed two versions of Taxpayer Protection Act legislation. Senate Bill 70, an amendment to the state Constitution sponsored by Sen. Camera Bartolotta, and Senate Bill 7, sponsored by Sen. Mike Folmer, are now eligible for a vote by the entire chamber. These bills protect middle-class Pennsylvanians from reckless spending and tax increases.

The Taxpayer Protection Act achieves four goals:

  • Limits the future growth of government spending to inflation plus population growth
  • Requires state government to prioritize future spending
  • Establishes a Rainy Day Fund to help balance the budget during economic recessions
  • Provides tax relief for working families

On several occasions, Gov. Wolf has urged his fellow citizens to, “please come with your own ideas. It’s not good enough to just say no and continue with the same old, same old.” The Taxpayer Protection Act would set the state on a new course.

Working Pennsylvanians deserve a government that lives within its means. They deserve to keep the fruits of their labor.

Read more about the Taxpayer Protection Act.

posted by JAMES PAUL | 04:15 PM | Comments

Pennsylvania's Economy Ranks a Dismal 39th

APRIL 10, 2015

Is placing 39 out of 50 in any competition acceptable? Most people would say no, which is why a new index published by the American Legislative Exchange Council (ALEC) is so unsettling.

Released on an annual basis, the Rich States, Poor States index ranks states based on their economic performance and economic outlook. In the first category, Pennsylvania performed poorly, ranking 39th. Future economic performance doesn’t look promising either. The authors of the index place Pennsylvania in the bottom ten at 41.

The rankings are based on fifteen different variables that include tax rates, debt service as a share of tax revenue, labor regulations, and tax or expenditure limits. Pennsylvania ranks poorly in nearly all of these areas year after year. As Jana Benscoter of Watchdog points out, Pennsylvania’s economic outlook ranking has never been higher than 33rd.

This isn’t surprising given the dramatic growth of government spending and taxation since 1970 and Pennsylvania’s inhospitable regulatory environment, both of which are roadblocks to job creation and prosperity.

But Pennsylvania doesn't have to continue down this path. If the commonwealth lowers the tax burden on businesses and families, restrains spending growth, and fixes its regulatory climate, we can shed these low rankings and grow an economy that works for everyone.

We're at a watershed moment, with a choice between the largest tax hike in Pennsylvania's history or reducing government spending to leave more in the pockets of Pennsylvanians. It's a choice between prosperity or economic stagnation.

posted by BOB DICK | 02:43 PM | Comments



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