Doubling Down on Tax Increases

Bucking calls to responsibly balance the budget, the state Senate passed a plan to borrow more than $1.2 billion and raise taxes by more than $570 million.

The total tax hike and borrowing package amounts to approximately $1.8 billion. Another $400 million depends on administrative changes, taking funds from the Joint Underwriters Association and a “promise” to pass a gambling expansion. Under the Senate’s plan, the state budget remains unbalanced until lawmakers agree to a deal on gambling expansion. Sound familiar? Lawmakers promised to balance the budget with gaming revenue last year. It never materialized.

If the proposal passes, it would be the second year in a row and the fifth time in the last nine years state government has increased Pennsylvanians’ tax burden. Below is a list of the seven tax increases found in the Senate’s plan:

The Gross Receipts Tax (GRT) is the largest tax in size and scope. It is a broad-based tax increase that would hit millions of Pennsylvanians who heat their homes with natural gas and electricity and use certain forms of transportation. Residents could also see higher cell phone bills, as the GRT is imposed on telecommunications companies. Other tax increases would affect online purchases through platforms like Ebay and those who buy state-approved fireworks.

Pennsylvanians already contend with the 15th highest tax burden in the country. This burden includes the second highest corporate tax rate in the industrialized world and the 12th highest rate of income tax revenue collected per person.

The Senate, unfortunately, has misdiagnosed the cause of Pennsylvania’s fiscal ills. The commonwealth isn’t under-taxing working people. Harrisburg has a spending problem.

Over the last three years, state spending in just the General Fund budget has risen by nearly $3 billion—a total that exceeds the spending increases of the prior 8 years.

However, it’s not all bad. Taxpayers can be slightly encouraged by the Senate’s decision to keep in place a Medicaid work requirement. They also protected seniority reform in the Education Code. However, as my colleague James points out, they nixed the proposed expansion of the Educational Improvement Tax Credit—a lifeline for students in failing school districts.

It’s now up to the House to hold the line on tax increases and focus on redesigning government to end this destructive cycle of constant tax hikes and slow economic growth.

Please encourage your representative to pass real reforms, not higher taxes.