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Independent Fiscal Office says Wolf's proposal would increase tax burden

Written by Ed Mahon | Apr 24, 2015 7:56 AM
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Photo by AP Photo/Keith Srakocic

A report from the state's Independent Fiscal Office says the tax burden for all income groups in Pennsylvania would increase under the governor's budget plan, although the director of the office said the increase for the lowest income group is so small that it is basically a wash.

The office released an analysis of the governor's revenue proposals Thursday. Here are some things to know.

1. WHAT THE INDEPENDENT FISCAL OFFICE SAID >> The report describes the net result of tax changes for six income groups in the 2018-19 fiscal year. The projections start with people making less than $25,000 and end with people earning $250,000 and above.

The report breaks down the net impact after other forms of tax and rent relief. Here are some examples.

If you count tobacco taxes, then the total tax burden for people making:

•$0 to $24,999 would increase by $8 million;

•$25,000 to $49,999 would increase by $316 million;

•$50,000 to $74,999 would increase by $503 million;

•$250,000 and above would increase by $1.01 billion.

If you don't count tobacco taxes, then the total tax burden for people making:

•$0 to $24,999 would decrease by $118 million;

•$25,000 to $49,999 would increase by $167 million;

•$50,000 to $74,999 would increase by $409 million;

•$250,000 and above would increase by $983 million.

Other income groups would see a total tax burden increase, as well.

Matthew Knittel, director of the office, said those figures don't mean that people in those groups will pay that much more in direct taxes. Instead, the report measures the net burden of changes, such as if a tax change will result in service costing more or less. For instance, the report projects a partial tax burden increase on Pennsylvania residents because of Wolf's proposed extraction tax on natural gas drilling.

2. WHAT REPUBLICANS SAID >> In a statement, House Appropriations Chairman William F. Adolph Jr., R-Delaware County, said the report shows the governor's proposal "is a huge tax grab that increases state spending by 16 percent and fails to deliver on the promises of net tax reductions being touted by the governor."

3. WHAT THE WOLF ADMINISTRATION SAID >> In a statement, Wolf spokesman Jeff Sheridan said the state "Department of Revenue has access to more sophisticated information on consumer spending habits, which is why we are confident that Governor Wolf's plan will deliver tax relief to middle-class families and seniors."

He said the department used data on consumer spending from the U.S. Census Bureau to show how sample families would be affected by the governor's plan. The Wolf administration estimates that an average family of four that owns a home and makes $100,000 or less would receive a net tax cut.

4. WHAT ELSE THE INDEPENDENT FISCAL OFFICE SAID >> The report projected that, by 2019-20, Wolf's proposal would increase net state and local tax revenue by $5.2 billion.

That would be made up of $9.8 billion in tax increases offset by $4.6 billion of tax and rent relief.

5. WHAT IS THE STATE INDEPENDENT FISCAL OFFICE >> It was created by 2010 legislation. The IFO says it doesn't support or oppose any policies it analyzes.

Contact Ed Mahon at 717-771-2089.

You can see the office's report below.

Viewing this on a mobile device? Click here to read the office's analysis.

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