Pennsylvanians Facing Historic Tax Increases with Gov. Wolf's New Budget

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Posted by Sven Werner, Patrick Gleason on Wednesday, March 18th, 2015, 3:28 PM PERMALINK

Recently Pennsylvania Gov. Tom Wolf presented his first budget, which includes the largest state tax increase in Pennsylvania history. His budget proposal of $33.6 billion represents a 16 percent increase over last year’s budget.

This increase of the income tax rate would mean a $2.3 billion net increase for Pennsylvania's taxpayers.  According to his budget, the income tax rate will be raised by 20%, from 3.07% to 3.7%. This proposed income tax increase, were it to become law, would have a significant negative effect on Pennsylvania taxpayers.  For a household making $60,000, it would raise their state income tax bill from $1,842 to $2,220, or an increase of $378.

Gov. Wolf’s budget proposal is historic, and not in a good way, as his proposed $4.5 billion state tax increase would be the largest increase in Pennsylvania history. Gov. Wolf uses these tax increases to increase spending by $800 million.

Senate Majority Leader Jake Corman (R-Centre) has called out the problems with Gov. Wolf’s plan:

“You don’t raise $4.5 billion in taxes to increase spending by $800 million,” Senate Majority Leader Jake Corman, R-Centre, said after the governor gave his address Tuesday. “Come on. Let’s all deal in reality here.”

Not only will Pennsylvanians face an income tax increase, but also an increase of the sales tax from 6 to 6.6 percent. In addition, under Gov. Wolf’s budget, many goods that have been exempt from the sales tax would be taxed, include nursing care, parks, and textbooks. It’s ironic that Gov. Wolf wants to start taxing textbooks, when at the same time he increases spending on education.

Wolf’s proposed budget hurts the economy’s driving forces the hardest: small business owners

The National Federation of Independent Business calls “small business the biggest loser in governor’s proposed 2015-16 state budget.” According to IRS data, over 776,000 small businesses file under the individual income tax system and Gov. Wolf’s budget would leave them with less income to hire more workers, give raises to current workers, and invest in Pennsylvania. That IRS data only accounts for sole proprietors. Including the share of small businesses made up of S-Corps and partnerships, a couple hundred thousand more small businesses that file under the individual income tax system in Pennsylvania and would be adversely impacted by Gov. Wolf’s budget.

Elections have consequences. Pennsylvania taxpayers will likely face perennial tax hike threats from Gov. Wolf. Fortunately, the Republicans-controlled legislature is less inclined to drain more money from the private economy to increase government coffers.

 

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