Governor Wolf's Budget Would Decrease Economic Growth and Hurt the Future of Pennsylvania

Governor Tom Wolf’s proposal for $4.7 billion in increased taxes for the fiscal year that starts July 1 to support increased state spending from $29 billion to $33.7 billion – an increase of 16 percent, will hurt Pennsylvanians and spiral Pennsylvania’s debt and deficit into unsustainable levels. Governor Wolf ran on political campaign that called for increased taxes and spending to “create jobs that pay, schools that teach, and government that works. That is what this budget achieves”. However, Pennsylvanians must question the consequences of this commitment if it means tighter budgets, smaller savings, and lower overall economic growth.

           

In particular, the plan calls for several tax increases:

“-Increase the state personal income tax by 20.5 percent, raising it from 3.07 percent of income to 3.7 percent on July 1, 2015.
- Increase the sales tax by 10 percent, raising it from 6 percent to 6.6 percent starting Jan. 1 2016.
- Provide $3.8 billion in property tax relief in Oct. 2016, eliminating property taxes for 270,000 seniors.
- Increase the cigarette tax by $1 per pack.
- Start taxing all other tobacco products, including e-cigarettes effective Oct. 1, 2015.”

           

All of these taxes ignore that Pennsylvania already faces the tenth-highest tax burden in the nation, hurting residents and encouraging emigration. Furthermore, income taxes increases will drive investment out of the state, and actually lead to lower income tax revenue overtime than the $2.4 billion Wolf expects. In addition, the increase in sales taxes to 6.6%, and increases in cigarette and tobacco taxes, will hurt poorer Pennsylvanians who are already forced to pay a high “sin tax”, and a high sales tax of 6%. Also, higher property and sales taxes to reduce the burden of school property taxes by $3.8 billion will negate the benefits of decreased property taxes through hurting Pennsylvanians in the long run.

             

More significantly, these tax increases will support a nearsighted spending plan that will expand funding for public schools of up to $2 billion over four years, a job growth plan that will cost $1.75 billion, and spending for social services. Instead, Pennsylvania should follow a different course; addressing the public pension crisis through increasing the percentage of a teacher’s income paid toward pensions, privatizing the Liquor Control Board, and other ways of reducing spending and taxes, to promote larger tax revenue and growth for Pennsylvania, and ensure a sustainable future.