(Harrisburg) -- A political action committee led by state Sen. Scott Wagner has put out a TV ad that says Gov. Tom Wolf's budget would be "sticking it to struggling taxpayers who barely can get by."
We are fact checking three specific statements in the ad from Reform PA PAC.
Wagner, a York County Republican, is chairman of the political action committee, according to Department of State records and the group's website. The ad itself only cites one source: "Wolf Administration Budget Proposal, March 2015."
Statement one: "Tom Wolf is now proposing one of the largest tax hikes in Pennsylvania history."
The narration's use of "one of" gives the ad some wiggle room, but the large text on the screen doesn't have a qualifier. It says, "LARGEST TAX HIKE In PA History" as cash falls down and a red arrow goes up over a map of Pennsylvania.
Wagner has not provided an analysis to back up that statement.
The Commonwealth Foundation, which has opposed Wolf's budget proposals, has called the governor's proposal the largest tax increase in state history. That statement does not factor in inflation or the percentage of total taxes collected, according to Nate Benefield, vice president of policy analysis for the Commonwealth Foundation. He said it's based on the dollar amount of the proposed increases.
The group has estimated that Wolf's budget would equal a net tax increase of $4.55 billion in 2015-16 and $4.39 billion in 2016-17. The group gets that number by adding up new revenue from increased or new taxes on tobacco, sales and use, personal income, natural gas drilling and other areas, and then subtracting tax cuts or relief for property owners, renters, businesses and others.
The state's Independent Fiscal Office did a similar calculation and came up with a net tax increase of $4.63 billion in 2015-16 and $3.82 billion in 2016-17. One reason for the different estimates: The IFO estimates that business tax cuts would be higher than what the Commonwealth Foundation estimates.
The state Independent Fiscal Office has not looked at how Wolf's proposed increases compare to all-time tax increases in Pennsylvania.
"That would not be as simple as it sounds," said Matthew Knittel, director of the office.
Comparing different tax increases is challenging for a number of reasons. For instance, not all tax revenue goes to the state's general fund, tax increases are often phased in over different years, and tax increases affect people and groups differently. The IFO, for example, has estimated that 80 percent of the tax burden from Wolf's proposed gas severance tax would go to non-Pennsylvania residents.
Changes in the state population affect spending, Knittel said. Tax increases can be used for new spending, closing deficits or both.
One big thing to consider is inflation, and Pennsylvania's income tax provides a clear example of why that matters.
The state used to not have a personal income tax. That changed after Democrat Milton J. Shapp got elected governor in 1970.
In the first fiscal year of the personal income tax, 1971-72, it brought in more than $890 million, according to historical budget documents. The next fiscal year, the tax brought in more than $1.02 billion.
If you adjust for inflation, $890 million in 1971 would have the same buying power as more than $5 billion in 2014, according to non-seasonally adjusted Consumer Price Index data for the Philadelphia metropolitan area. And $1.02 billion in 1972 would have the same buying power as about $5.66 billion in 2014, based on the same data.
If you used similar data for Pittsburgh or national averages, the value of $890 million or $1.02 billion in 2014 would be even higher.
So, adjusted for inflation, that personal income tax increase in the 1970s would be higher than Wolf's net tax increase, based on IFO revenue estimates for the next fiscal two years.
Statement two: The narrator says Wolf's tax increase equals $9 billion "over a two-year period."
Wolf has proposed lots of tax increases and lots of tax cuts, and he's proposed, among other things, increasing education funding.
While the Reform PA ad does not mention the cuts, the $9 billion figure appears to take them into account.
Wagner's $9 billion figure is close to what the Commonwealth Foundation has estimated as the net two-year increase of about $8.94 billion.
But Wagner's $9 billion figure is about $550 million higher than what the Independent Fiscal Office estimates as the net increase for 2015-16 and 2016-17. In April, the office estimated that the net revenue increase would be $8.45 billion for the first fiscal two years.
Statement three: "Higher taxes on diapers, daycare services, meals and even college textbooks."
Wolf has proposed raising the state sales and use tax from 6 percent to 6.6 percent and expanding what is covered by it.
The ad's statement about diapers, daycare services and college textbooks is fairly straightforward. Right now, those things are exempt, so you don't pay any state sales tax on them. Under Wolf's plan, you would pay a 6.6 percent rate.
The statement about meals is more complicated.
Wolf's plan would keep certain exemptions for the state sales and use tax, such as for grocery store food.
Sales of ready-to-eat foods are currently subject to the tax. So if you buy a hot pizza, your sales tax on that would increase from 6 percent to 6.6 percent under the governor's plan.
College meal plans are currently exempt, but they would be taxed under the governor's plan. The Department of Revenue estimates eliminating exemptions for higher education meal plans and fees not included as part of tuition would generate $120.9 million for 2016-17.
Amanda Davidson, who is listed as treasurer of Reform PA PAC, said the ad is referring to college meal plans. But the image associated with that statement is an apron-wearing woman in a kitchen with three young children.
Elizabeth Brassell, a spokeswoman for the Department of Revenue, said in a written response to sales tax questions that the governor has said his proposal should be looked at as a whole.
She pointed to his support for increased higher education funding. Wolf has also called on state-owned schools to freeze tuition, and for state-related universities and community colleges to keep any tuition increases as low as possible.
Statement No. 1: This one is pretty deceptive. You really need to consider inflation in such calculations. If you do, the introduction of the personal income tax under Gov. Shapp would be larger than Gov. Wolf's proposals.
Statement No. 2: The $9 billion figure is close enough to win a game of horseshoes.
Statement No. 3: There is just a minor discrepancy here. The imagery of the woman cooking wrongly gives the impression that ingredients for home-cooked meals would be taxed. Not so.
-- Scott Fisher, YDR editorial page editor
In an email, Gov. Tom Wolf's press secretary, Jeff Sheridan, called the ad ridiculous.
"This latest stunt from Senator Wagner is yet another example that he has no understanding of the challenges facing Pennsylvania families and schools and he has no interest in working toward real solutions," Sheridan said.
Sheridan said the governor "knows the status quo is unacceptable," and he said the governor has three priorities: enacting an extraction tax to increase education funding; eliminating "the structural deficit without gimmicks"; and reducing property taxes for middle-class families and seniors.
Visit www.yorkblog.com/ydrpolitics for more on budget issues, including:
•the numbers behind a statement from the Commonwealth Foundation that Gov. Tom Wolf's budget proposal would equal the largest increase in state spending since Democratic Gov. Robert P. Casey's 1991-92 budget.
•an analysis from a Keystone Research Center labor economist, who compared total general fund revenue for the state with total personal income in the state. The economist, Mark Price, said that method gives you a view of how big the government is relative to the income the economy is generating.
By that measure, the governor's proposal doesn't represent a radical change in tax policy, said Price.
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