{"id":7676,"date":"2016-07-02T18:14:52","date_gmt":"2016-07-02T22:14:52","guid":{"rendered":"http:\/\/marcstier.com\/blog2\/?p=7676"},"modified":"2016-10-14T02:34:20","modified_gmt":"2016-10-14T06:34:20","slug":"how-pennsylvania-should-raise-revenues-this-year","status":"publish","type":"post","link":"https:\/\/marcstier.com\/blog2\/?p=7676","title":{"rendered":"How Pennsylvania Should Raise Revenues This Year"},"content":{"rendered":"

\"cap2\"<\/a><\/p>\n

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 in both reaching agreement and meeting three important criteria for new sources of revenue:<\/p>\n

    \n
  1. The new revenue source needs to be real rather than a fantasy generated by wishful thinking.<\/li>\n
  2. The new revenue source needs to be recurring rather than a one-year bridge.<\/li>\n
  3. The new revenue should not increase the inequity of our tax system, which is among the ten most inequitable state tax systems in the country, by placing most of the burden on low- and middle-income people.<\/li>\n<\/ol>\n

    As I point out in my next post, most of the proposals for new revenue receiving attention in the Capitol meet none of these three criteria. But one proposal meets all of them: the 4% tax on income from wealth PBPC proposed three months ago<\/a> and that Senators Haywood, Costa, and Hughes introduced as SB1258 two months ago.<\/p>\n

    The PBPC-Haywood proposal suggests that we bifurcate our Personal Income Tax and increase the tax on what we call income from wealth \u2014 dividends capital gains, business profits, royalties, and estates \u2014 to 4%, while leaving the tax on income from wages and interest at the current rate of 3.07%.<\/p>\n

    While the uniformity clause prohibits any class of income from being taxed at more than one rate, it does not prevent us from taxing different<\/i> classes of income at different<\/i> rates. We can take advantage of this feature of our Constitution to create a tax that falls most heavily on those with the highest incomes.<\/p>\n

    As the paper being released today points out<\/a>, a 4% tax on income from wealth would raise $788 million. Sixty-seven percent of that amount would come from Pennsylvania households in the top 5%, with incomes over $184,000. Forty-six percent of the amount would come from Pennsylvania households in the top 1% with incomes over $426,000. They would pay on average $5,305 per year while those between 5% and 1% would pay on average $617 per year. Households in the bottom 20%, with incomes below $22,000, would on average pay $4 a year. Households in the middle 20%, with incomes between $46,000 and $65,000, would on average pay $31 a year. And even households in the fourth quintile, with incomes between $65,000 and $101,000 would only pay $67 a year.<\/p>\n

    A 4% tax on income from wealth would be far lower than the highest tax rates on income in any of the states with income taxes that surround Pennsylvania. Even a rate of 5% or 6%, which would generate roughly $1.6 billion and $2.5 billion respectively, would still tax those with the highest incomes at lower rates than other states in our region.<\/p>\n

    A 4% tax would not only fall most heavily on those with the highest incomes, who have captured most of the income growth in Pennsylvania over the last ten years, it\u00a0would generate substantial revenues that increase over time.<\/p>\n

    Unfortunately, as we will see in my next post<\/a>, Pennsylvania’s legislators are considering a variety of other revenue ideas which mostly don’t meet the three criteria I set out at the beginning of this post.<\/p>\n

    \n","protected":false},"excerpt":{"rendered":"

    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<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[107,108],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p35YuU-1ZO","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/7676"}],"collection":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7676"}],"version-history":[{"count":6,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/7676\/revisions"}],"predecessor-version":[{"id":7781,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=\/wp\/v2\/posts\/7676\/revisions\/7781"}],"wp:attachment":[{"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marcstier.com\/blog2\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}