Wolf’s plan to increase taxes raises concerns
I am more than willing to give a chance to govern to Tom Wolf: a well-intentioned, intelligent, sharp, affable and engaging man.
I am concerned, however, about his grand plan for Pennsylvania as communicated in his budget address, a plan whose legacy would appear to be mammoth tax and spending increases.
The governor is crystal clear about the revenue enhancements that he wishes to enact: a hike in the state income tax from 3.07 percent to 3.7 percent (the first increase in this tax since 2003) and extending it to personal services (imagine paying a hefty tax on necessities such as a funeral or a home repair); a boost in the state sales tax from a base of 6 percent to 6.6 percent (the first increase in this levy in 50 years); a new Marcellus Shale extraction tax of 5 percent (plus an amount to ensure the continuation of local impact fees which currently benefit areas that host drilling), and a $1 a pack cigarette tax boost.
Regrettably, specifics about Mr. Wolf’s proposed “drastic” property tax relief are murky. The governor asserts that homeowners will see an “average” reduction of 50 percent, claiming that this will put as much as $1,000 in his or her pocket. What of the middle class family which currently pays many thousands of dollars in property taxes? He promises to give more money to all school districts, but how will we be assured that those with a proclivity to overtax and overspend will not squander it?
He notes that the commonwealth currently funds 35 percent of education costs and promises to increase it to 50 percent, something which is deceiving as the figures are entirely dependent on the school district in which one resides. For the current school year, state funding of my school district covers only about 20 percent of its budget. The commonwealth will certainly never pay anything close to 50 percent of its costs.
The governor had the opportunity to push for elimination not only of the school property tax, but municipal and county levies and to kill the expensive, convoluted, inaccurate, and inequitable assessment systems that tie property owners into knots, but he chose a half measure.
A middle class family with an annual income of $100,000 would pay an additional $630 in income taxes under the Wolf plan. Considering the additional sales tax burden and the expansion of it to services not previously taxed, this family might break even if they receive a property tax reduction on the high end of the savings estimate.
A positive development in the interest of bipartisan cooperation is that the governor threw bones to Republicans by proposing a revolutionary reduction in the onerous Corporate Net Income tax and elimination of the despised Capital Stock Franchise Tax. If similar proposals had been made by Gov. Corbett, the Democrats would have howled in disapproval, but because a Democratic governor is launching the initiative, it is being well received by those on his side of the aisle.
The governor states with modesty that he does not have all the answers and that he welcomes opposing views, but his address failed to adequately address the issues raised by Republicans as the most important: stanching the bleeding from the metastasizing state pension fund shortfall, which is in excess of $50 billion, something for which he proposed no specific, cogent solution, and finally allowing freedom to ring in the commonwealth by responding to the will of the people and privatizing alcohol sales. Surely the latter will be seen by the GOP as a more sensible and painless means of raising badly needed revenue than tax hikes, but the governor proposes to “modernize” this anachronistic holdover from Prohibition. Surely this smart and successful businessman knows better.
A governor can expect that a final budget will by no means be a mirror image of what he has proposed. Much of what Tom Wolf has put forth is being panned by Republicans, who surely will work to revise it significantly if not to change it so radically that will bear no resemblance to its original form. I would advise that our elected officials not make any vacation plans for July 1, the date by which a new budget is required to be signed into law. I am expecting a long, hot summer in which war is waged on the Susquehanna River.
Oren M. Spiegler is a resident of Upper St. Clair.