How the $650 Million Tax Increase Impacts You
The state budget is, for all intents and purposes, complete. While it remains unbalanced, we now know exactly which taxes are going up.
The $650 million tax hike passed by the legislature is less destructive than Governor Wolf's $2.7 billion proposal—which would have taken another $850 per family of four—but it still demands more of working Pennsylvanians in the midst of a struggling economy.
The chart below breaks down the additional $204 per family of four in new taxes. It also shows which Wolf tax hikes were not approved.
|Tax Hikes in the 2016-2017 Budget|
|State Tax Rate Changes||
|Per Capita||Per Family of Four|
|Income tax on lottery winnings||$15,800||$1.23||$4.94|
|Digital downloads sales tax||$46,900||$3.66||$14.65|
|Bank shares tax||$23,000||$1.80||$7.19|
|Cigarette tax hike||$431,100||$33.67||$134.69|
|Smokeless tobacco and e-cigarettes tax||$64,600||$5.05||$20.18|
|Limit on vendor sales tax discount||$55,500||$4.34||$17.34|
|Gambling tax on table games||$16,800||$1.31||$5.25|
|Total State Tax Increases||$653,700||$51.06||$204.24|
Low-income Pennsylvanians will feel the brunt of the tax increases, since the bulk of the new revenue comes from cigarettes and tobacco products. Those making less than $30,000 spend 14.2 percent of their income on tobacco, while those earning between $30,000 and $59,999 spend only 4.3 percent.
To add insult to injury, politically-favored corporations were awarded new forms of corporate welfare. The final budget increases the film tax credit for Hollywood film producers by $5 million, beginning next year, and adds at least $9 million in a variety of other corporate handouts.
To shield Pennsylvanians from higher taxes, elected officials must control spending. A great place to start is reducing corporate welfare by limiting borrowing and tax credits. Passing true pension reform will also go a long way in relieving the long-term budget squeeze on school funding.