Gov. Tom Wolf’s administration is disputing an independent report finding his budget proposal would amount to a net tax increase for Pennsylvanians of all income levels.
John Hanger, a top aide, told reporters Friday that the Independent Fiscal Office is relying on shaky data and overlooking the potential for economic growth under the governor’s proposed reductions in business taxes.
“I appreciate their ambition, but they are trying to expand the analysis to areas where the data sets are very weak and very difficult,” said Hanger. “This plan rebuilds the middle class. And at the end of the day, it produces some of the lowest tax rates amongst the 50 states for the four key taxes that Pennsylvanians pay.
The IFO report released Thursday finds Wolf’s plan makes for a more progressive tax structure, with a heavier burden on the wealthy – Pennsylvanians making $100,000 or more a year.
But the report also says the lowest-income groups would see higher tobacco and sales taxes, as well as modest increases in personal income taxes and utility prices. Two-thirds of the total new tax burden would fall on wealthier Pennsylvanians, the report found, while one-tenth would be shouldered by the lowest-income earners.
The governor’s plan would lower local property taxes, especially for poor and overburdened areas, but it would hike the taxes on personal income and sales, with a major expansion on which purchases are taxed. It would also cut business taxes, close a corporate tax loophole, and levy a new tax on natural gas drillers.
Wolf has said the overall proposal would boost education funding and economic development programs while closing a structural deficit. The Republican-controlled state Legislature has balked at the proposed tax increases.