On June 1st, the state house voted on Governor Wolf’s tax proposal in its entirety. The result of the vote: 193 nays and 0 yeas – not a single affirmative vote, not even from his own party. In the aftermath, the Governor’s office described the vote as a political stunt, even though when the Governor was asked during an earlier interview about his proposal, he responded, “It actually is a holistic program. It’s not meant to be cherry-picked.” Following that vote, Jeff Sheridan, a member of the Governor’s staff, complained, “Governor Wolf inherited a $2.3 billion deficit, woefully underfunded schools, a stagnant economy, and families across the commonwealth are struggling with high property taxes — the status quo is not acceptable”.
Indisputably, the Governor has identified true critical problems: The budget deficit, underperforming and fiscally unsustainable public education, a struggling economy, and increasingly burdensome property taxes for more and more homeowners, with many losing their homes. However his proposed tax increases, the largest in the history of the commonwealth, are a false solution. Higher taxes will further stifle the economy. His budget throws more money into the same foundering k-12 education system and ruinous pension systems. And for every dollar of property tax relief offered, he imposes $3.33 in new taxes. Worse yet, he does not address the underlying driver of property tax, i.e. the pension liability, so any relief from high and increasing property tax would only be temporary.
His proposed tax increases would hit Pennsylvanians young and old, at all income levels. In addition to increasing the income tax, Governor Wolf would impose new tobacco and energy taxes. He would raise sales tax and extend sales tax to previously excluded goods and services including day care, nursing home care, home healthcare, college texts and fees, and funeral services.
Before going any further I want to be clear, inappropriate taxation is not unique to Democrats. It is a political establishment, Republican and Democrat, problem. Know that it was a Republican legislature and Governor that passed the big pension increase in 2001. It was the Republicans who last year passed a gasoline tax resulting in a 9.5 cents/gallon increase initially and ultimately a total of 26 cents/gallon by 2017. Diesel fuel cost increases are even greater. It is the current Republican legislature that is now seriously considering imposing a severance tax on natural gas extraction which can only result in higher energy costs for all of us.
Inappropriate government taxation and spending is not a struggle between conservatives and liberals, but rather between citizens and their government. It is the derelict action of a government originally established by the citizens of this commonwealth and country to protect their life, freedom, and property. Leaving aside the questions of what are appropriate government expenditures and services, we must understand that any level of taxation in the absence of careful assessment of current spending is governing laziness and self-service. We must not let them shirk the hard work and true public service of critically evaluating current expenditures, eliminating wasteful programs, and reallocating the taxpayer dollars they already collect.
Careful evaluation of the current PA General Fund spending of $29.1 billion, one can only conclude that much of that spending is wasteful or serving special interests. Let’s consider just a few examples.
Corporate welfare is an obvious area to stop wasteful special interest spending and redirect those dollars to legitimate budgetary priorities. The Commonwealth Foundation has identified over $725 million of taxpayer funded “economic development” programs. Adding to that amount the taxpayer dollars spent by other state agency development grants and on interest on economic development bonds reveals total PA corporate welfare is measured in the billions of dollars. Knowing what we know of government competence and special interest service, could we believe that the government confiscating money out of the economy to promote the economy could possibly work? In fact, experience answers that question. The Council for Community and Economic Research found that the 10 states with the highest economic development spending had lower economic growth than the 10 states with the lowest spending.
K-12 education spending is another area where money could be saved and reallocated. Public education costs have tripled in inflation adjusted dollars over the last 40 years and yet educational outcomes have stagnated. This striking collapse in productivity stands in stark contrast to the private economy where freedom of choice and innovation has driven remarkable productivity growth, revolutionizing so many other aspects of our lives. We have much more – necessities, entertainment, comforts, and technology – for much less. Reform introducing freedom of choice in k-12 education would spur similar innovation and productivity growth freeing up billions of the current $26 billion spent and would result in better outcomes.
Appropriate reform of the state pension systems would also free up billions of dollars for critical budgetary needs. This year state and school district taxpayers will deliver an estimated $4.6 billion into the state pension systems and yet those systems still have a conservatively estimated $50 billion unfunded liability. A recent Penn Live investigation revealed that at least 995 individuals have state pensions in excess of $100,000/yr, not counting health benefits. Further, these retirement benefits are not subject to state taxes. 13 of the top 25 persons on that list are Penn State Employees. Former Penn State President Rodney Erickson collects $477,000 annually. These rich benefits partly account for the $230 million taxpayer dollars going to PSU and the $50 million increase proposed by Governor Wolf.
Government does not have a revenue problem. It has a spending problem. They take enough of our hard-earned money. Stopping them from increasing taxes forces them to do the hard work to better allocate the more than sufficient taxes they already collect.
Please join the campaign for liberty. Our future freedom and prosperity depend on it.