Clothes, groceries, house payments—these necessities are likely some of your largest monthly bills. But can you guess what bill is bigger than all three combined? Hint: If you haven’t filed them by now, you might be in trouble. That’s right—taxes.
This year, Pennsylvania as a whole worked until April 22nd —dubbed Tax Freedom Day by the Tax Foundation—to earn enough to cover federal, state, and local taxes. That’s an eye-watering 112 days, or nearly one-third of the year, working for the government.
Here’s the punchline: Government wants even more.
Despite having his record-high tax hikes rejected during the 2015-16 state budget impasse, Gov. Wolf again demanded a bigger share of your paycheck in his latest budget plan. Specifically, he wants to raise the personal income tax by 11 percent—starting four months ago. He also plans to increase sales taxes on services like cable television, hike taxes on natural gas producers, and more.
All told, his proposal is the biggest spending hike in 25 years and ups taxes by $850 per family of four.
Will making Pennsylvanians spend even more of the year paying taxes solve the state’s deficit problems? Hardly. Budget Secretary Randy Albright said even if all of Wolf’s proposals are adopted, a structural deficit would return just one year later. That’s not the long term fix Pennsylvanians want.
A better solution is controlling spending growth and reassessing wasteful programs.
Some want us to believe state government has already been “cut to the bone,” but Pennsylvania leads the nation in wasteful corporate welfare spending, giving $700 million this year to big corporations.
Netflix, for example, recently received $18 million in Film Tax Credit subsidies to shoot a series in Pittsburgh. That might sound great for the city, but the benefits often go out of state. In fact, about 70 percent of production-related wages paid by companies receiving the Film Tax Credit go to non-Pa. residents. Worse, for every dollar in tax credits, the state recoups just 14 cents in related business activity, according to the Independent Fiscal Office.
Still, for more than a decade, Pennsylvania has tempted filmmakers with your tax dollars.
Movies aren’t the only form of entertainment the state subsidizes. We also have a long history of catering to sports franchises. State taxpayers have forked over $600 million for stadium construction since 1999.
The Pittsburgh Penguins are a prime example. Mario Lemieux, the hockey team’s owner, secured millions in subsidies for the Pen’s CONSOL Energy Center by threatening to move the team. He later admitted, “We had to do a few things to put pressure on the city and the state, but our goal was to remain here in Pittsburgh all the way.”
That’s a textbook example of big business using taxpayers as a piggy bank with politicians’ help.
Before the governor or legislators consider asking for higher taxes, they must ensure our money is being spent responsibly.
To be fair, much government spending supports core functions like road maintenance and public schooling. But the rate of government spending growth is worrisome. Many programs are essentially on autopilot—growing every year without much input from lawmakers.
Over the past 10 years, total state government spending grew by 42 percent—far more quickly than personal income growth. That adds up fast. This year, Wolf’s proposed total operating budget—the true cost of state government—reached $80 billion, or nearly $14,000 per Pennsylvania worker.
Instead of raising taxes, Pennsylvania must slow spending growth and reprioritize programs. That should start with the low-hanging fruit that both sides of the political aisle can agree on: eliminating handouts to big corporations.
With nearly one-third of the year spent paying taxes, we should see Tax Freedom Day as a reality check. The path to prosperity is not found in higher tax burdens, but in leaving more in Pennsylvanians’ pockets.
Elizabeth Stelle is director of policy analysis for the Commonwealth Foundation, Pennsylvania’s free market think tank.