What do waking up, driving to work, and stopping at Starbucks have in common?
Each of these seemingly mundane activities is impacted by state taxes. Think about it: You likely wake up in your home, provided you pay your annual property tax bill. Your car’s gas is taxed at the highest rate in the nation. Your paycheck carries a 3.07 percent income tax, which is nonexistent in seven other states. Even buying coffee at Starbucks costs you 6 percent in sales tax.
Individually, these state taxes may seem reasonable. Indeed, most Pennsylvanians don’t mind supporting government’s critical services.
But with Pennsylvanians already bearing the 15th highest state and local tax burden in the nation, according to the Tax Foundation, would higher taxes fund critical services—or simply enable government waste?
Consider education. The goal should be tangible results for kids, not simply dollar signs. Despite spending nearly $16,000 per student, academic achievement remains flat. If money could buy results, we’d be at the head of the class already. Unfortunately, too many resources supposedly designated for education instead fund bloated bureaucracies that manage onerous state mandates but bring little benefit to students.
One glaring example of wasteful spending under the guise of education is Pennsylvania’s “ghost teacher” practice that lets school employees rack up years of absences to do union work. As a recent Pittsburgh Tribune-Review editorial noted, “millions of dollars in salaries and benefits are paid to ‘ghost teachers’ who work not in classrooms but exclusively for their unions.” Allentown Education Association president Deb Tretter, for example, has received a taxpayer-funded pension and salary since 2009.
Then, there is the 6.2 percent raise the Pennsylvania Liquor Control Board (PLCB) recently gave its executive director John Metzger—bringing his annual salary to $154,035. Not only was this position created as a political favor, but the PLCB itself is an archaic monopoly rife with corruption. While the recent wine-expansion bill improved convenience, it did nothing to reduce the PLCB’s waste. Eliminating this agency completely would raise $220 million annually through licenses, fees, and increased sales.
Pennsylvania also doles out nearly $700 million in corporate welfare to well-known corporations like Netflix and American Eagle Outfitters. We have topped the nation in these selective business subsidies since 2007. Yet, their promise of job growth rarely materializes. In fact, the ten states spending the least on corporate welfare from 2007-2015 saw faster job growth than the ten states spending the most.
Gov. Wolf wants to spend even more on corporate welfare—raising your taxes to do so. This is not asking Pennsylvanians to pay for core government services but for government handouts to multi-billion dollar corporations.
Finally, our rapidly growing safety net programs demonstrate the urgent need for more efficiency in government programs. In the last five years, state welfare spending has skyrocketed by a billion dollars while our poverty rate has remained steady. The standard should be results, not simply more money, when it comes to helping vulnerable Pennsylvanians.
Last year, for example, Gov. Wolf estimated that mandated human services spending would require an additional $866 million. Yet, legislators met the actual need by approving just $215 million more. Would the extra $651 million have supported those who need it most? Or would it have benefitted government bureaucracy instead?
The pattern is clear. Without robust oversight, higher taxes can end up enabling government inefficiency by propping up programs in dire need of reform.
It’s time to break this cycle and spend smarter before resorting to tax hikes. Even relatively small targeted tax hikes on gambling or cigarettes fail to address the source of government waste and inefficiency.
Instead of scrambling to raise more revenue from hardworking Pennsylvanians, Gov. Wolf and lawmakers must first question the assumption that every tax dollar is currently being spent wisely, efficiently, and effectively.
Pennsylvanians are willing to share the cost of important government services. But before they are asked to send even more of their money to Harrisburg, they deserve to know they’re funding a government that truly works.
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Elizabeth Stelle is director of policy analysis for the Commonwealth Foundation (CommonwealthFoundation.org), Pennsylvania’s free-market think tank.