What’s in the Latest Tax Hike Plan?
Editors Note: updated (12/18) to reflect recent developments
As reported by ABC 27 and others, Pennsylvania House leaders will hold a vote on an estimated $1.8 billion tax hike, if Gov. Wolf can convince enough lawmakers to support the proposal. If the governor cannot find the votes, the General Assembly will move forward with a “rescue budget,” such as HB 1812, new legislation with 51 sponsors.
The details of the tax proposal are coming together, with the plan rumored to include multiple tax hikes, including an income tax increase and elimination of a couple sales tax exemptions. Though as Capitolwire (paywall) notes, these details may change as Wolf makes promises to secure votes for the tax hikes—each of which bring negative consequences for families and businesses across the state:
1. Increase in the personal income tax from 3.07 percent to 3.30 percent. This tax will affect just about every working Pennsylvanian in the state. How large is the scope of this tax increase? It could hit more than 5 million workers and 775,000 small business owners that help to employee about half of the state’s workforce.
The tax increase would add to the state’s stifling tax burden and come at a time when the economy is lagging behind other states in income, job and population growth. High taxes are already driving people away and draining the state of financial resources.
2. Eliminate the sales tax exemptions on digital downloads and movie tickets. Eliminating these sales tax exemptions could hurt the earning potential of the entertainment industry and will make a trip to the movies more expensive. Better buy your Star Wars: The Force Awakens tickets now!
3. Business filing fees. Yet another burden on job creators, the proposed fee is estimated to cost about $106 million. The fee is in addition to the second highest corporate tax rate in the country.
4. An increase in the bank shares tax. According to testimony from the PA Bankers Association, the current bank shares tax is already higher than most other states, and raising it could hurt lending in the commonwealth.
5. A cigarette tax increase (75 cents per pack). Cigarette taxes disproportionately hurt low-income people and are not a stable source of revenue. Moreover, when the state approved a cigarette tax increase for Philadelphia, retailers saw their sales plummet by 15 percent as smokers flocked to the suburbs. The plan also appears to tax roll-your-own cigarettes, and e-cigarettes.
6. Other tax increases. The deal may also include a higher Gross Premium Insurance Tax (a tax on Homeowners Insurance), an Income Tax on Lottery Winnings and limiting the uncapped sales tax vendor discount to $300 a year (the program allows PA retailers to keep a portion of the sales tax they collect).
Let your representative and senator know Pennsylvanians can't afford higher taxes.