Friday, October 30, 2015

Welcome to Taxylvania

While budget negotiations roll on, the Pittsburgh Tribune-Review published an interesting opinion piece on taxation, noting that Pennsylvania already is among the top 10 states with the highest tax burden.  It's written by a professor of economics at Duquesne University and a Senior Fellow of the Institute of Political Economy at Utah State University.  Since much of the discussion in the impasse has been focused on Gov. Wolf's proposed tax hikes, it's worth a few minutes of your time to read it.


There is a bipartisan recognition that we have a big problem in Pennsylvania," Gov. Tom Wolf has said. The governor is a master of the obvious, we'll give him that. But he apparently is oblivious to the fact that he is that big problem. His obsession with raising taxes has created a nearly four-month budget impasse that has left us in the company of just one other state — Illinois — without a budget.

Wolf's campaign motto was "a fresh start." Mission not accomplished.

How bad is it? Pennsylvania already is among the top 10 states with the highest tax burden. Apparently Wolf wants us in the top five. That won't be easy to accomplish, primarily because we already are so overtaxed in the first place. There just aren't many more things left to tax. According to the nonpartisan Tax Foundation, Pennsylvania ranks 46th out of the 50 states for favorable corporate taxes and 42nd for favorable property taxes. The only bright spot is that the commonwealth is the 17th most favorable state for individual income taxes. Any guess as to what tax Wolf wants to increase?

And those rankings only are for business and individual income taxes. The grim tax news doesn't end there:

• Pennsylvania's sales tax is 16th highest in the country.

• Wolf would like to expand it to apply to even more consumer goods.

• At 14 percent, we're even among the worst 10 states for cellphone taxes.

• At more than 50 cents per gallon, our gasoline tax is the highest in the country — almost double the national average.

• Of the 50 states, we have the highest unemployment insurance taxes. Perversely, this might actually be good news. Given the onerous business tax climate, Pennsylvania workers will need all the unemployment insurance they can get.

If you add up all the business taxes, income taxes, sales taxes, gas taxes, fees, licensing, tolls and other revenues collected by the state and local governments, the average Pennsylvanian pays more than $8,000 per year to keep our political behemoth moving. That's about 20 percent of the average Pennsylvanian's income. And Tom Wolf thinks that isn't enough.

Governments, of course, have no business spending more money than they take in. Deficits simply are taxes on the unborn. It is time, instead, to apply some common sense to the matter. There are only two possible solutions. One is to try to squeeze more money out of the people. The other is to spend more frugally. We all know that the governor is (perhaps congenitally) inclined toward the former. It is high time for the latter.

Pennsylvania has been taxed to the point of near ruin. Our business climate already is among the worst in the nation; there is nothing on the horizon that will make it any better. This virtually guarantees that we will continue walking down our anemic economic road, even as Wolf asks for more and more of our money.

Twenty percent is enough, Governor. If you can't do your job with that much, maybe it is time for Pennsylvania to have a fresh start without you.

Antony Davies is associate professor of economics at Duquesne University. James R. Harrigan is director of academic programs at Strata in Logan, Utah.


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