The Government Union Billion Dollar Tax Hike

In 2012, Americans paid more in taxes than they did for food, clothing and shelter combined. In Pennsylvania, residents labor under the 10th highest tax burden in the country. Put simply, Pennsylvanians already pay too much in taxes.

Yet government union executives, who pretend to be champions of the middle class, support increasing taxes on working Pennsylvanians. AFL-CIO executive Rick Bloomingdale explains why in a 2012 speech: “But remember, we [government unions] live off tax revenue.”

Mr. Bloomingdale is exactly right: Government unions depend on tax hikes and bigger government to survive.

So it should come as no surprise when the CLEAR Coalition, consisting of Pennsylvania’s largest government unions, who send members’ dues to this lobbying and advocacy group, lobbying for Representative DiGirolamo’s alternative budget, which calls for a tax increase of more than $1 billion.

The long list of tax hikes and other revenues in this proposal:

  • Stop the already-delayed phase out of the Capital Stock and Franchise Tax
  • Move to mandatory unitary combined reporting (MUCR) for corporations
  • Eliminate the vendor discount for businesses that collect sales tax for the state
  • “Amazon tax” on Internet sales bought by Pennsylvania residents from out-of-state companies
  • Natural gas severance tax
  • New tax on e-cigarettes and smokeless tobacco
  • Roll back the net operating loss allowance for corporations
  • Cut the Educational Opportunity Scholarship Tax Credit
  • Give the Pennsylvania Liquor Control Board the flexibility to raise prices on wine and liquor
  • Expand Medicaid to get more “federal dollars”

What would be the the impact of this $1 billion government union tax hike?

1) Higher business costs and fewer jobs.

Supporters see businesses tax hikes as a way to make corporations and “the rich” pay their “fair share.” But this new revenue doesn’t come out of thin air. It requires employers to make cuts elsewhere, often to the detriment of the most vulnerable.

Raising taxes on businesses results in higher prices, forcing consumers to pay more for products and services, and higher utility bills. Further, higher taxes means less money available for businesses to invest and expand, making Pennsylvania less competitive nationally and internationally. This means fewer jobs, lower wages and lost opportunities for workers.

We don’t get to witness the jobs that aren’t created and opportunities lost because of high taxes, but evidence shows how high taxes (combined with overspending) undermine state economic growth.

2) Ending educational opportunities.

The Opportunity Scholarship Tax Credit offered more than 1,300 students scholarships to their school of choice in its first year by encouraging businesses to donate to scholarship programs.

The OSTC is growing in popularity both among students and businesses. Scholarships for students who need a lifeline from failing and violent schools should not be on the chopping block. Rather, lawmakers should look at other areas of the budget, like corporate welfare and targeted tax breaks, that are ripe for elimination.

3) Consumers will pay more for wine and liquor.

As part of the effort to “modernize” the government liquor monopoly to “act more like a business,” the union billion-dollar tax hike would give the PLCB the power to raise prices on wine and spirits to generate more revenue.

In other words, to help fund the highest spending levels in the state’s history, you will have to pay more for your beverages at state liquor stores. This is nothing more than a back-door tax increase.

4) Expanding a broken welfare system.

Medicaid does not provide quality care and perpetuates the poverty trap. Expanding this program to put one in four Pennsylvanians on welfare harms rather than helps the truly needy.

Moreover, Obamacare’s Medicaid expansion requires billions in new spending, adding to the program’s current unsustainable spending growth. This will increase the deficit and require dozens of new taxes. Leaving future generations to pay for today’s bills is the wrong approach to balancing the state budget.

And “savings to the state” are unlikely to materialize as the federal government, which is more than $17 trillion in debt, is already looking at ways to cut their Medicaid spending by shifting more of the cost back to states.

The total tax hike on Pennsylvanians from this union leader-backed proposal? – $1.06 billion

Not only are government unions throwing their support behind a $1 billion tax hike, they’re doing so with the help of taxpayer resources. If unions want to campaign for higher taxes on working people, that’s their prerogative; but they should not be using taxpayer resources to aid their campaign.