PA Taxes

Last year at our budget summit, we said that Pennsylvania is at a crossroads and that there are two paths forward. We are still there. Pennsylvanians—and their government—are divided about which of two paths they believe our state government should follow.

One view is that the public sector—both the work of government and the work of non-profits that rely on state government funding—is essential to creating broadly shared prosperity in Pennsylvania. The other view downplays the positive role of government and public investments, and sees the taxes that pay for them as an impediment to economic growth. 

Gov. Tom Wolf presented his 2017-18 State Budget Proposal on February 7, 2017.  The Pennsylvania Budget and Policy Center will be posting analysis, infographics and related documents on this page as they become available. Check back often for the latest updates.

The State of Pennsylvania desperately needs new, recurring revenues, both to overcome a serious structural deficit that may lead to devastating budget cuts and to restore and enhance public education, human services and environmental protection. 

 

The tax on sugar-sweetened beverages (SSBs) proposed by Mayor Kenney, also known as the “soda tax,” is controversial mainly because, like other sales taxes, it takes a greater share of the income of poor families than rich ones. However, while the costs of the soda tax fall more heavily on those with low incomes, more of the benefit of the tax will go to low-income Philadelphians as well, for two reasons:

The first benefit of the tax flows from how the new revenue will be spent — on pre-K education, community schools, and parks and community recreation centers. Pre-K education helps kids from low- and moderate-income families have a better start in life. Studies have shown that children who attend pre-K programs score higher on academic tests and that these benefits are greater for those whose families have lower incomes. And the effects of Pre-K education are long lasting: long-term studies have shown that those who receive Pre-K education have higher IQs at age 5, have higher high school graduation rates, are more likely to own a home and have higher incomes at age 40.

 

This briefing paper analyzes several options for raising revenue for the Pennsylvania state budget which would fall much less on middle- and low-income families than the existing Pennsylvania state and local tax system.

In his budget address, Governor Wolf observed that Pennsylvania faces a choice of two paths. Taking one path would require us to deal with the reality of our structural deficit and raise revenues to close it. It would enable government to continue to meet its responsibilities to educate our children, serve those who need our help, protect the environment and encourage economic growth. Taking the other path would require us to accept devastating cuts to education and health and human services.

The ideas in this document were compiled by the Pennsylvania Budget and Policy Center based on our own work and that of our partner, the Keystone Research Center, and that of advocates on many issues. The names of our partners are in our letter to the Governor and the members of the General Assembly.

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