In comments at the Pennsylvania Press Club yesterday, Sen. Jay Costa addressed the state deficit and called for tax increases. Costa said, “A year from now, someone will be standing here and probably repeating the same thing.”
That’s probably true—there is a group of people who are always calling for higher taxes and new revenue. They will be calling for higher taxes next year, just as they called for higher taxes last year. But it’s important to point out this fact: The legislature increased taxes last year.
For those who need reminding, the legislature approved and Gov. Wolf signed a $650 million tax increase last year. Or at least the tax increases were projected to generate $650 million.
As I point out in a recent policy memo—we need to learn from the mistakes of the past. After last year’s tax hike, the state economy slowed to a crawl, nearly one hundred vape shops closed, and another budget deficit emerged.
The reality is simple: Raising taxes isn’t going to solve the budget deficit. Government spending continues to outpace the growth of the state economy (and holds back job and income growth). Unless we slow the growth of state spending or tackle policies to grow the economy, we will be back in the same situation next year.
Lawmakers should double down on Gov. Wolf’s call to “reinvent government.” As we’ve highlighted in recent analyses, that includes reforms like privatizing liquor sales, reducing subsidies for corporations, and reforming welfare programs.
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