Something Borrowed: Governor Wolf’s Revenue Ideas

Jan Jarrett |

Governor Wolf’s proposed state budget addresses the Commonwealth’s structural deficit and raises the money needed to strategically invest in growing Pennsylvania’s economy, educating its children, creating good jobs, and caring for its most vulnerable citizens. His plan plainly lays out where the revenue will come from to make those investments possible.

None of the governor’s revenue-raising ideas are new. Similar ideas have been proposed in prior legislative sessions by lawmakers on both sides of the aisle.

For example, the governor proposes raising the personal income tax to 3.7 % and the sales taxes to 6.6%, while broadening the sales tax to include some additional goods and services but not food and clothing. Our online side-by-side comparison breaks down how these increases compare to Republican-sponsored legislation introduced last session.

Specifically, 2013-14 House legislation proposed by Rep. Reed would have increased the PIT to the same 3.7% level the governor proposes, while Rep. Cox and Sen. Argall proposed a higher increase to 4.34%.

Rep. Cox and Sen. Argall proposed raising the sales tax to 7%, higher than the governor’s proposed 6.6%, and broadening it to include most food, clothing, and personal services. Rep. Reed also proposed raising the sales tax to 7 percent but did not broaden it to additional items.

The Cox and Argall proposals garnered support from a large number of legislators:

  • 48 Republican and 13 Democratic cosponsors in the House, and 13 Republican and 12 Democratic cosponsors in the Senate;
  • 47 Republicans and 12 Democrats in the House voted for Rep. Cox’s proposal;
  • 12 Republicans and 13 Democrats in the Senate voted for Sen. Argall’s proposal.

Rep. Reed’s proposal was not voted on; it had seven Republican cosponsors.

Since 2008, legislators on both sides of the aisle have also introduced legislation similar to the other revenue proposals in the Wolf budget: a severance tax on natural gas drilling, a tax on smokeless tobacco and cigars, and proposals to close the loopholes corporations use to artificially lower their income taxes (such as the Delaware loophole).

Obviously, legislators’ willingness to support raising revenue depends on how the money is used. On that issue, it is noteworthy that a main use of the revenue raised in the Wolf, Cox, Argall, and Reed proposals would be to lower property taxes.

Because revenue proposals similar to the governor’s have received bipartisan support in the past, the budget debate this year should not be short-circuited by the claim that lawmakers won’t support broad-based tax increases on this scale. That claim is demonstrably false.