Category: Taxation

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A Severance Tax: The Basics

  By PA Budget and Policy Center, PBPC Blog posts, Severance Tax, Taxation

Pennsylvania has been considering a severance tax on natural gas for years. Here are four reasons it is long overdue: TALKING POINT #1: A severance tax can bring in substantial and, as natural gas prices rise, growing revenues to help close our budget and investment deficits now and in the future. Governor Wolf’s proposal is projected to bring in $349 million next year, $712 million in 2018-2019 and $1.15 billion a year by 2021-22. (These are net revenues after deducting a credit for the impact fee already paid by natural gas drillers.) Even a tax at slightly lower levels brings in over $200 million next year and close to a billion dollars a year 2021-2022. TALKING POINT #2: Oil and gas development companies pay comparatively little in state taxes now. Even though gas production has increased from 4,070 billion cubic feet in 2004 to 5,096 in 2016, total revenue from… Continue reading

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What Is the Fair Share Tax?

  By Fair Share Tax, PA Budget and Policy Center, PBPC Blog posts, Taxation

The main reason that Pennsylvania’s tax system is so upside down — with the top 1% paying only 4.3% of their income in taxes while the middle 20% pays 10% — is that the Pennsylvania Constitution prohibits us from enacting a graduated personal income tax. Sales and property taxes tend to take a higher percentage of the income of taxpayers at the bottom and in the middle than at the top. But graduated income taxes in many states — including all of our neighbors — compensate by taxing those at the top at a higher rate. We can start to fix our broken tax system by adopting what we call a Fair Share Tax which has been introduced by Senators Costa, Hughes, and Haywood as SB555.  Here are the key elements of it: The Personal Income Tax which is currently set at 3.07% will be divided into two taxes. The… Continue reading

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Ding Dong the Witch is Dead

  By PA Budget and Policy Center, PBPC Blog posts, Taxation, US

Sam Brownback became governor of Kansas in 2010 just as Tom Corbett became governor of Pennsylvania. Brownback and Corbett, with the help of Republican majorities in their legislatures, embarked on an extremist Wizard of Oz economic agenda of cutting taxes, especially for large businesses, and reducing spending on education and human services. Spending as a share of the state’s economy dropped by 10% in our state. Faced with slow economic growth, stark budget deficits, and citizens who were demanding better public services, a bi-partisan majority in the legislature in Kansas this week stood up for common sense against Wizard of Oz extremism and, over Brownback’s veto, rolled back many of those tax cuts. Is this the year that state legislators in Pennsylvania also embrace common sense and reject extremism?   Continue reading

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Is this the year Pa. resolves its perennial budget crisis?

  By Budget, PA Budget and Policy Center, Pennsylvania, Pennsylvania Budget, Published op-eds, Taxation

This piece originally appeared in the Philadelphia Inquirer, December 28, 2016. Many of us who write about budget politics have a keyboard shortcut to enter “Pennsylvanian Budget Crisis” into a document. Year after year, we write in December about the upcoming crisis and again in July (or sometimes far later) about how the crisis has been temporarily averted. It is crisis time again. But perhaps this is the year we can change the script. There are new ways to do something that has eluded us in the past – solve the crisis on a long-term basis without imposing harsher new taxes on working people and the middle class.   Before coming to our long-term solution to the crisis, first a word about its dimension and cause. The Independent Fiscal Office has projected that the deficit for the current fiscal year, ending June 30, will be $500 million while the deficit… Continue reading

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Time to fix our upside-down tax system

  By Pennsylvania State Taxes, Published Op-Eds, Taxation

Originally published by the York Dispatch, December 23, 2016 Pennsylvania has been struggling with persistent budget deficits since the start of the Great Recession in 2008. And we at the Pennsylvania Budget and Policy Center have been recommending a “balanced approach” to resolving the deficit from the beginning, one that combines restraint in spending with new revenues. But since 2010, under Gov. Tom Corbett and Gov. Tom Wolf, the General Assembly has adopted an unbalanced approach. Spending has gone down but revenues have gone down faster. From 1994 to 2011, under both Democratic and Republican governors, the state spent 4.7 percent of the state’s GDP. During the Corbett years, that fell to 4.3 percent as spending on education and human services were sharply cut. And while, thanks to Wolf, the state has been able to restore some of those cuts, spending in the last two years remains at the same level as… Continue reading

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The rich can take the hit–to fix the budget they should pay their fair share.

  By PA Budget and Policy Center, PBPC Blog posts, Pennsylvania Budget, Pennsylvania State Taxes, Published Op-Eds

Marc Stier | 01/17/2017 Blog This piece originally appeared on Pennlive, December 23, 2016. You remember how Lucille Ball would work her way into some kind of predicament and then look around and wonder how she got there? That’s how our state legislators seem to look at the budget deficit we are stuck with right now. They are looking around wondering how the current Pennsylvania budget deficit, which approaches $3 billion for this year and next year together, happened. But it didn’t just happen. It was the product of a series of long-term and short-term decisions made by legislators, sometimes with the help of our governors. Let’s start, however, with what did not cause the budget deficit, because too many of our legislators, like Lucy, want to blame someone else for the mess they have made. Growth in state spending is not the cause of budget deficits. From 1994 to… Continue reading

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Broad and Narrow Taxes

  By PA Budget and Policy Center, PBPC Blog posts, Pennsylvania, Taxation

Last week, just as we were putting out our paper on how to raise revenues without raising taxes on working people and the middle class, Governor Wolf announced that he would not call for raising broad-based taxes, particularly the personal income tax and sales tax, in the budget proposal he puts forward in February. And, of course, the Governor’s statement echoes what the Republican leaders of the General Assembly have been saying as well.   A friend asked me if I were disappointed by these announcements. I quickly responded, “not at all.”  Most of our tax plan is precisely designed NOT to require increases in broad based taxes. Indeed, the core of our proposal—a new tax on income from wealth—targets families in the top 5%, and even more the top 1%, of incomes. Sixty-seven percent of new revenues would come from top 5%. Middle- and low- income families would pay very… Continue reading

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The Budget Our Democracy Deserves

  By Fair Share Tax, PA Budget and Policy Center, PBPC Blog posts, Taxation

Many of the ideas in this post are components of PBPC’s recently-released “Fair Share Tax Proposal for Pennsylvania.” The recent political talk about Pennsylvania is focused on the latest in a series of fiscal crises. But lurking in the background is a larger crisis—a crisis of democracy in Pennsylvania. The deficit approaches $3 billion for this year and next year combined. Yet the solutions that one would think were most obvious in a putative democracy are not the ones the leaders of our General Assembly seem inclined to support. We are never going to solve our budget crises in Pennsylvania if we don’t fix our upside-down tax system. Pennsylvania is one of what the Institute on Tax and Economic Policy calls the “terrible ten” states when it comes to tax fairness. We tax those with high incomes at a far lower proportion than those with low incomes. State and local… Continue reading

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New Report: How To Raise Revenues While Sparing Most Pennsylvanians

  By John Neurohr, PA Budget and Policy Center, PBPC Blog posts, Presentation, Taxation

In the wake of Budget Secretary Randy Albright’s mid-year budget briefing and the news that the Pennsylvania budget for 2016-17 will have a deficit of $600 million, the Pennsylvania Budget and Policy Center today released a new, comprehensive revenue proposal to address the looming deficit for FY 2017-18, which when combined with the deficit for this fiscal year, could approach $3 billion. The new report,  How to Raise Revenues While Sparing Most Pennsylvanians,” can be read in full here. While the current year deficit is a problem for the state, unfortunately it is not the biggest budget problem we face. The Independent Fiscal Office is projecting a 2017-18 deficit of $1.7 billion, which does not include the ongoing costs of higher human service caseloads which might add $300 million or more to the total. One barrier to raising revenues is the reluctance of legislators on both sides of the aisle to… Continue reading

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The Fair Share Tax to Support Public Investment in Pennsylvania

  By Fair Share Tax, PA Budget and Policy Center, Policy reports, Taxation

This paper puts forward a plan, which we call the Fair Share Tax, that would take a major step toward fixing Pennsylvania’s broken tax system and raise the revenues we need to invest in the public goods that are critical to creating thriving communities and individual opportunity in our state: education, infrastructure, protection for our air and water, and human services. Click here to print or read full screen. Continue reading