Property Tax Elimination in PA — on HB/SB 76

As we at the Pennsylvania Budget and Policy Center point out here, some people believe that the constitutional amendment on the ballot in November would make it easier to enact some version of the property tax elimination proposal HB /SB 76. We’re not sure that this is true. But if it were, we would certainly oppose the constitutional amendment because HB / SB 76 is possibly the worst policy proposal we’ve ever encountered.  There is a superficial appeal to the proposal to replace the property taxes raised to fund Pennsylvania’s schools with state-wide income and sales taxes. We rely too heavily on local taxes, mostly property taxes, and far less heavily on state taxes to fund our schools. And the over-reliance on local property taxes is one of the main reasons we have the most inequitably funded schools of any state in the country. It is also why property taxes … Continue reading

This Is Not Normal

It’s hard to look at politics in America without being afraid for our future. Everywhere we look we see extremist movements that reject common standards of argument and evidence and are willing to say anything to advance their cause—and they will not compromise even at the cost of creating a public disaster. What we see so clearly in our federal government is happening in state politics as well. And it is time for us to recognize and name it. The influence of extremist politics in the state budget process this year was not normal. And good government in this state will be impossible if it becomes normal. This year Pennsylvania faced a serious budget deficit of close to $3.5 billion. And thanks to Governor Wolf and Republican leaders in the Senate, we had a chance to deal with it in a responsible bipartisan way. But right-wing extremist Republicans in the … Continue reading

GOP-Trump Tax Plan: A Windfall for Top 1% of Pennsylvania, a Tax Increase for Many Middle-Class Pennsylvanians

  A 50-state analysis of the GOP tax framework reveals that in Pennsylvania, the top 1 percent of taxpayers would receive a substantial tax cut worth $67,970 while many upper-middle-class Pennsylvanians would face a tax increase. This plan is bad for Pennsylvania and our country. At a time when incomes are rising for the very rich and relatively stagnant for everyone else, a plan that lavishes tax breaks on the top 1 percent, and pays for it in part by taxing others, should not be the starting point of our tax reform debate. The Washington-based Institute on Taxation and Economic Policy released the 50-state numbers today. While GOP leaders have pitched the plan as a tax cut for the middle class, the analysis shows that this is not true for the nation as a whole or for Pennsylvania. While most Pennsylvanians would receive a modest tax cut, on average that cut … Continue reading

No Time For Giving Up

It appears that members of the General Assembly are moving towards a final plan for funding the budget they passed in June. We share the sense of relief that is gradually emanating from the Capitol—we, too, are tired of talking about the budget. But we also know that the urge to get something done can sometimes overcome the urge to get it done right. So now is the time for members to demand that this budget not just be finished but be finished right. That means two things. First, that the revenue plan include sufficient recurring tax revenue to address our long-term structural deficit. The pain of the last three months will be for naught if the state finds itself facing an even larger deficit on July 1, 2018. A large deficit in an election year offers too much temptation for the worst kind of budget chicanery and gimmickry, which … Continue reading

Don’t Let the Extremists Win

There are lots of rumors about a budget deal flying around Harrisburg but few details and even less assurance that votes will be found to approve in the House and the Senate. What little we hear is concerning. And the best way to understand our concerns is to look again at why we have not reached a deal until this point—extremists control the Republican Party in the House. There is a broad agreement among Democrats and most Republicans that Pennsylvania has a structural budget deficit (which simply means that year after year revenues will not pay for state expenditures, either those approved by the General Assembly this year or those demanded by Pennsylvania voters). There is broad agreement among Democrats and most Republicans that we need new tax revenues to close the deficit this year and in the future. And there is broad agreement that a severance tax should be … Continue reading

The GOP Federal Tax Proposal: Multiple Reasons to Worry

The outline of the tax proposal released by President Trump and Republican House and Senate leaders should worry all Pennsylvanians for multiple reasons. First, the plan calls for adding $1.5 trillion to the deficit over the next ten years. This is remarkably hypocritical, given that Republicans blamed President Obama for deficits even as they declined year after year after the end of the Great Recession. And it is economically risky at a time when the economy is growing. Republicans claim that tax cuts will generate much faster economic growth. This is unbelievable, given the record of previous huge tax cuts during times of economic growth. And, of course, most professional economists, on both the Left and Right, do not believe it at all. Second, the likely result of added deficits will be new pressure to cut federal spending to balance those deficits, with most of those cuts coming from health … Continue reading

How Pennsylvania Should Raise Revenues This Year

Now that a general appropriation bill has been passed by the House and Senate, the General Assembly and the Governor are turning their attention to finding the revenue to pay for it. And they are running into difficulties both reaching agreement on tax revenues that are real, recurring, and fair. But the PBPC-Senator Haywood proposal to slightly raise taxes on income from wealth meets all three criteria. Continue reading

Some Things are Worse Than a Late Budget

From the Third and State blog. As the June 30th deadline looms, we have little more than rumors about what kind of Pennsylvania budget might be enacted by the General Assembly for 2016-17. But while some may find optimism in talk of getting the budget done, the rumors we are hearing about the details of the budget in the works are extremely worrisome. We know that everyone on both sides of the aisle wants a budget done more or less on time. All members of the House and half the members of the Senate face re-election in November, and none of them want a long, drawn-out budget and delays in funding schools and human services. Yet to reach agreement on a budget legislators have to find their way between their determination to get one done and the structural deficit that requires either some new revenues or difficult budget cuts. More … Continue reading

How to Create a Progressive Income Tax in Pennsylvania

Originally appeared as How to create a progressive income tax in Pennsylvania, in Newsworks, May 24. So, it turns out that you can actually create a fair income tax in Pennsylvania. One of the unfortunate conditions of Pennsylvania politics has been our “uniformity clause,” which prohibits taxing any one class of income at different rates. It has stood in the way of creating what most states with an income tax have, a graduated system in which those with higher incomes pay at a higher rate. A consequence of our uniformity clause is that our state and local taxes, taken together, are among the most regressive in the entire country. The Institute on Tax and Economic Policy lists Pennsylvania as one of the “Terrible Ten” states with the most unjust tax system. It’s not hard to understand why. State and local taxes take a little over 12 percent of the income of the … Continue reading