Republicans Choose Tax Cuts for the Rich over Funding Education

By Blog Post, Press Statements

Yesterday, Senate Majority Leader Joe Pittman (R-41) introduced legislation to cut Pennsylvania’s personal income tax rate from the current 3.07% to 2.8%.

This legislation is both deeply cynical and totally revealing of the unfortunate priorities of Republicans in Harrisburg. For it shows us that, once again, they have chosen to cut taxes for the rich rather than fund education fully and fairly.

Ever since a majority of the Basic Education Funding Commission (BEFC), with the support of Governor Shapiro, embraced a seven-year plan to meet the constitutional obligation to fund our schools, the Republicans have had only one response: “We can’t afford it.” They did not appeal the Commonwealth Court decision, which declares that the current system of funding schools is unconstitutional. They did not propose an alternative to the BEFC plan. They just said, “We can’t afford it,” even though the state has more than a $14 billion surplus.

But while they say we can’t afford to fund our schools, it appears they believe we can afford to cut the state’s personal income tax (PIT) by almost $450 million per year by fiscal year 2028. And because the PIT is a flat tax, most of the benefit of the tax cut would flow to the richest Pennsylvanians. Our analysis shows that Pittman’s bill would, on average, reduce taxes for the top 1% of taxpayers, with an average income of $1.9 million, by $5,435 per year. It would reduce taxes for the middle 20% of families, with an average income of $67,100, by $181. And because of the tax forgiveness program, it would most likely not reduce taxes for people in the bottom 20% by more than $20 per year.

This is not the first time Republicans have chosen cutting taxes for the wealthy over funding education. Just two years ago, they forced Governor Wolf to accept a 60% reduction in the Corporate Net Income Tax (CNIT) to secure a small increase in school funding. That nearly $2 billion-per-year reduction in corporate tax revenues was in addition to the more than $4-billion-per-year reduction in corporate taxes over the last 20 years as a result of phasing out the Capital Stock and Transfer Tax and reducing the CNIT base under Governor Corbett.

These corporate tax cuts, along with our flat tax and overreliance on sales and property taxes, is why Pennsylvania has the fourth most regressive tax system of any state, in which the top 1% pay less than half the share of state and local taxes as families in the middle or bottom of the income distribution.

Moreover, if we compare the decline in share of tax revenues that comes from corporate taxes to the decline in the state share of funding for schools—the primary source of the deep and persistent inequity in school funding—you can see that these data series track one another almost perfectly.

The Republican insistence—sometimes with Democratic connivance—on cutting corporate and other taxes is the prime cause of the current education funding crisis.

Pittman’s bill is just one more instance of these same distorted priorities. And, they are especially problematic because there is no evidence that tax cuts for the rich have in the past, or would in the future, spur our economy or create more jobs at any reasonable cost. There is also a great deal of evidence that fairly funding our schools would lead to greater educational achievement for Pennsylvanians and both economic growth and job creation.

If the General Assembly wants to cut taxes now, there is a far better way to do so than a reduction in our flat tax. The state could adopt a variant of the Fair Share Tax plan the Pennsylvania Policy Center has been putting forward over the last five years. That plan would cut the tax rate on two classes of income wages and interest while raising the tax rate on what we call income from wealth: dividends, capital gains, business profits, royalties, estates, and gambling winnings. Since most income from wealth is earned by those at the top of the income distribution, 54% of any increase in revenues would come from the top 1% and another 24% from the next 4%. More than 60% of families would get a tax cut, and another 22% would see no change in their taxes. Only about 17% of families would pay more.

If the members of the General Assembly just want to provide some tax relief for working people, they could cut the tax rate on income from work to 2.5% and increase the tax rate on income from wealth to about 4.25%, leaving overall revenues unchanged.

Or, if our representatives and senators want to begin to repair our tax system while raising more revenue for education they could set the tax rate on income from wealth at 6.5%, which would raise about $2 billion in new revenues for the state.

Either of these proposals would be a reasonable way to improve our tax system without reducing revenues we need to fully and fairly fund education or increase those revenues by adopting the second plan.

These are the proposals that state legislators would be putting forward if they were ready to fix the immoral and unconstitutional education funding system in Pennsylvania.

May 7, 2024

Statement on PA House Passing the ‘Pre-canvassing Bill’ (HB 847)

By Press Statement

FOR IMMEDIATE RELEASE

May 2, 2024

CONTACT: Kirstin Snow, snow@pennpolicy.org

STATEMENT on House Bill 847 – Marc Stier, Executive Director, Pennsylvania Policy Center

Legislation would give counties 7 days to pre-canvass mail ballots ahead of Election Day

(Harrisburg, PA) — Pre-canvassing is the process by which county election officials prepare mail and absentee ballots for counting on Election Day. Pennsylvania’s voters have been waiting YEARS for approval for pre canvassing which would allow counties to manage the election process and deliver results to voters as quickly as possible. There are several reasons the Senate must pass this legislation now:

This legislation is not loaded with partisan wish lists; it is straightforward and supported by the County Commissioners Association, an organization with Republican leadership, and numerous organizations that support voting rights.

It helps address the challenges that election officials face in administering elections and getting results to people as quickly as possible, which helps provide assurance to voters that the system is working.

Pre-canvassing can also help protect the right to vote by providing a chance for voters to be notified if there is a technical problem with their ballot, helping to prevent voters from having their votes not counted due to small technical errors like a missing envelope or the wrong date.

It would avoid a replay of the 2020 presidential election, wherein it took PA election workers nearly a week to count and certify mail-in ballots, thus delaying the vote count on the national level.

The Senate must act to pass this bill — all the people who have said they have any concerns can do the one thing that local election officials from all parties have said they need. It is time for the Senate to do the commonsense thing, and that is to pass this legislation in a bipartisan fashion.

###

May 2, 2024

Join Us for Our Online Tax Justice Conversation!

By Blog Post

Dear Friends –

At Pennsylvania Policy Center we are continuing our call to reverse our upside-down tax system, and demand corporations and the ultra-wealthy to pay their fair share!

Please join the PA Megaphone team and our Pennsylvanians Together campaign for another conversation about tax justice leading up to Tax Day!

Pennsylvanians work hard, day in and day out, to take care of their families—but many of us are struggling to make ends meet while wealthy corporations and the 1% get richer and richer.

Join us at 12:30 PM on Friday, April 12 for a special Tax Day organizing event.

We’ll hear from some special guest speakers, including a Patriotic Millionaire and an SEIU home care worker to discuss why we must make our tax system more fair for working families. Then, PA Megaphone and Pennsylvanians United will share ways we can join together to advocate for tax justice online and offline.

This virtual event will take place as a Zoom webinar at 12:30 p.m. on Friday, April 12.

More details to be announced shortly! RSVP now to stay in the loop.

What is tax justice?

Tax justice means that ultra-rich individuals and wealthy corporations pay what they owe.

It means that their share of taxes enables us to provide the common goods we all need to create a growing, high-wage economy and a strong future for all of us.

And it means rejecting even more tax cuts for large corporations and the wealthy—tax cuts that create few jobs but undermine public education, the building and improvement of roads and bridges, and other public goods that create jobs.

Learn more about Pennsylvanians Together’s Tax Justice campaign here.

Dwayne Heisler, Campaign Director, Pennsylvanians Together

The Pennsylvania Policy Center aims, through its research and policy development, to create the tools that political officials, opinion leaders, grassroots organizations, and the people of PA need to expand our vibrant democracy, secure our freedom, and seek economic justice in Pennsylvania.

April 10, 2024

Why We Should Raise the Minimum Wage in PA to $15 Per Hour – 2024 Update

By Blog Post, Fact Sheet

Go here for a printable and full-screen version .

[pdf-embedder url=”https://pennpolicy.org/wp-content/uploads/2024/04/2024-MinWage-OnePager-Update-for-2024-1.pdf” title=”2024-MinWage-OnePager-Update for 2024″]

April 4, 2024

End Local Minimum Wage Preemption

By Blog Post

By Marc Stier, Executive Director, Pennsylvania Budget and Policy Center

As I documented in a previous blog post, there is no question that the minimum wage is worth less than it was at an earlier time in our history, even though we are a far more prosperous country today than in the past. Yet large numbers of people—more than 21% of all workers in Pennsylvania—earn less than $15 per hour or just above it.

And that’s why we need a minimum wage. It is one of the critical policies—like the right to form unions, the social safety net, and a tax system that asks the rich to pay at a higher rate than the poor—ensures we have an economy that works for all of us, not just the wealthy owners of huge corporations.

We show respect for the dignity of work by ensuring all workers are paid a decent wage that allows them to support themselves and their families. Opponents of a higher minimum wage want people to do the work but don’t care about their dignity. And, thanks to our tax dollars, they get the work—for we pay to subsidize wealthy corporations that fail to pay their workers a living wage thus forcing those workers to supplement their low wages with the benefits from social safety net programs.

But what is the proper level for the minimum wage? And where should it be set?

I’ve made the case for raising the minimum wage to at least $15 per hour in a previous blog post. Here I want to argue that, at least in some parts of the state, it’s time to raise the minimum wage above $15. Doing that requires Pennsylvania to repeal the preemption law preventing local governments from raising their minimum wage above the statewide level.

The rationale for a minimum wage higher than $15 per hour in at least some parts of Pennsylvania can be seen by looking at the table below, which provides data from the Massachusetts Institute of Technology Living Wage Calculator in 2023. According to the authors, “A living wage is what one full-time worker must earn on an hourly basis to help cover the cost of their family’s minimum basic needs where they live while still being self-sufficient. The Living Wage Calculator’s estimate of a living wage includes eight typical expenses or basic needs: food, child care, health care, housing, transportation, civic engagement, broadband access, and other necessities.

Due to differences in the cost of living and employment conditions, a living wage varies from one region and one county to another.

You can see from the table that while a $15 minimum wage provides a living wage for single workers without children in some counties in Pennsylvania, a higher wage would be necessary to provide a living wage in 43 of Pennsylvania’s 67 counties. More than a $16.00 minimum wage would be necessary in 17 counties, including Allegheny County, and more than $17.00 in seven counties, including Philadelphia and all of its collar counties, as well as Centre and Pike Counties. At $18.31, Pike County has the highest living wage level of all counties in our state.

Factoring in the cost of providing for children, a living wage far exceeds $15 per hour in every county in the state. For a single parent it is over $30 in every county in the state. And even with two working parents it is over $17 in every county.

So, it is time to raise the statewide minimum wage to $15, along with an annual cost-of-living increase. It’s also time to allow counties to experiment with higher minimum wages adjusted for local economic conditions. While conditions may not currently allow for a minimum higher than $15 in every county in the state, it’s likely that some counties—or groups of counties in some areas such as Southeast Pennsylvania—would raise the minimum wage above $15 soon if given the option to do so. And ending preemption of local choice with regard to the minimum wage would not just move us closer to a living wage in many places in the state, it would enable the kind of experimentation that helps us improve minimum wage policy statewide.

See the MIT Living Wage Calculation for Pennsylvania Counties chart below:

(Click here to view the chart in a PDF reader or to download or print.)

Living Wage

April 1, 2024

It’s Long Past Time to Raise the Minimum Wage

By Blog Post

By Marc Stier, Executive Director, Pennsylvania Policy Center

I took my first regular paid job as a hotel bellhop in 1966 when I was eleven. It was hard work—in many ways harder than anything I do today. People came to stay for a week or three and that meant a summer of schlepping heavy bags, sometimes up two flights of stairs. The tips were sometimes good and sometimes not.

The minimum wage in 1968 was $1.60. But when I got my first paycheck, I was astounded to see that my pay rate was only eighty cents per hour. This made no sense to me, so I went to speak to my boss.

I said, “Mom, why am I only getting paid half of the minimum wage?” She explained the tipped minimum wage to me that day and ever since I’ve opposed that policy, which makes employees dependent on the good will of customers for their sustenance.

However, the moral of this story is not just about the tipped minimum wage. It’s also about the relative value of the minimum wage over time.

After adjusting for inflation, a minimum wage of $1.60 in 1968 would be $14.18 today, which is far above our minimum wage of $7.25 in Pennsylvania. And adjusted for inflation, the minimum wage is now worth less than at any time since the mid-1950s.

Comparing the minimum wage in 1968 to the minimum wage today doesn’t just require an adjustment for inflation. Average labor productivity has increased by 176% since 1968—that is workers on average generate 176% more economic value today than in 1968. Working people, as well as the ultra-rich, should benefit from growing productivity, so we should adjust the minimum wage to reflect both the increase in productivity increases and inflation. If we do that, an adjusted minimum wage of $1.60 in 1968 would be a minimum wage of $24.90 today.[1]

Here is another way to think about the decline in the value of the minimum wage. In 1968, a single person working full-time at the minimum wage would earn enough to lift a family of three above poverty.[2] Today, a single person working full time at Pennsylvania’s minimum wage of $7.25 barely keeps himself or herself above the poverty line.

And finally, one more way to think about the minimum wage in an historical context. When the minimum wage was created and set at 25 cents per hour in 1938, it was equal to 43% of the mean (average) wage in Pennsylvania. By 1968 when I took my first job, the minimum wage had reached 52% of the mean wage in Pennsylvania. Today it has fallen to about 25% of the mean wage. A $15 minimum wage would take us back to the level we reached in 1968, about 50% of the median wage.

It’s precisely because the national minimum wage of $7.25 is so inadequate that almost every state around us has raised its minimum wage far above it. The District of Columbia has a minimum wage of $17. Connecticut’s minimum wage is $15.69. New York, New Jersey, and Massachusetts each have a $15 minimum wage. Delaware and Maryland will each have a $15 minimum wage by January 1, 2025. And Ohio’s minimum wage is $10.45. West Virginia’s is stuck at $8.75, but even that is still higher than Pennsylvania’s minimum wage of $7.25.

Source: Keystone Research Center

Pennsylvania workers have fallen behind because the state hasn’t raised the minimum wage in more than 13 years.

According to the Keystone Research Center, only about 60,000 Pennsylvania workers earn an hourly wage that is at or below the minimum wage of $7.25. But 1.34 million additional Pennsylvania workers would see their wages rise with a $15 per hour minimum wage by January 2026. Almost 776,000 who make less than $15 per hour (including 60,000 making below $7.25 and hour and 716,000 making between $7.25 and $15 per hour) would see their wages go up to $15. Another 568,000 who make just above $15 an hour would see a wage increase as pay scales are adjusted upward in response to a higher minimum wage. A total of more than 21% of Pennsylvania’s workforce would see their wages go up.[3]

That kind of increase in buying power would not only help low-income workers but it would give our economy a boost, especially for local small businesses.

It’s long past time for Pennsylvania to join the rest of the region—and much of the country—in setting a minimum wage that works for today, not long ago.

[1] Data on the growth in labor productivity can be found here: Joni Sweet, “How Labor Productivity Has Changed Since 1950,” Stacker, March 20, 2024, https://stacker.com/business-economy/how-us-labor-productivity-has-changed-1950. We relied on the full data set found here: FRED: Federal Reserve Economic Data, “Nonfarm Business Sector: Labor Productivity (Output per Hour), https://fred.stlouisfed.org/series/OPHNFB.

[2] Stephen Herzenberg, Claire Kovach, and Maisum Murtaza, “2023 State of Working Pennsylvania,” Keystone Research Center, August 30, 2023.

[3] Claire Kovach, “Who Benefits? The Demographic Impact of a Minimum Wage Increase in Pennsylvania,” Keystone Research Center, February 1, 2024, https://keystoneresearch.org/research_publication/who-benefits-the-demographic-impact-of-a-minimum-wage-increase-in-pennsylvania/.

April 1, 2024

Seven Myths About Raising the Minimum Wage—Debunked (2024 update)

By Blog Post

Note This is an updated version of a piece I wrote while I was director of the Pennsylvania Budget and Policy Center. It was published in the Penn Capital–Star on October 3, 2019. A few things have changed since then—and I’ve added a sixth and seventh myth to supplement the original five—but most of the arguments I made at that time not only remain true but are supported by new evidence.

Raising the minimum wage in Pennsylvania is long overdue. Yet even though the Pennsylvania House of Representatives passed a good minimum wage bill in 2023 that was actually modeled on one introduced in the Senate, Pennsylvania’s Senate Republican leadership continues to refuse to hold a hearing or bring it up for a vote where, we believe, it would almost certainly pass.

Some legislators remain apprehensive about raising the minimum wage because they believe some of the myths about its economic consequences are doing so. Others are using these myths as an excuse for opposing the minimum wage. They need an excuse because the Chamber of Commerce and other pro-business groups that give them campaign contributions oppose the minimum wage.

Why do these business groups oppose raising the minimum wage? It’s because they understand what this issue is about. It’s not just about more money going into the pockets of working people, although that is critical. The minimum wage is part of the effort to change the rules of our economy so that working people do better. In addition to raising the minimum wage his also means strengthening the right to organize unions and fixing a tax system that takes a higher percentage of the income of the poor than the rich. Raising the minimum wage is one step toward reversing the trends of the last 40 years in which a greater share of our income and wealth has gone to the very rich. A minimum wage increase would help benefit all working people and help expand the middle class.

We aren’t going to convince those who believe the rules of our economy should be tilted in favor of the ultra-rich and wealthy corporations that the minimum wage is no threat to them. It is such a threat. But we can show that it’s not a threat to anyone else by refuting the myths about the so-called “dangers of raising the minimum wage.”

MYTH ONE: “The minimum wage was never meant to be a living wage. It’s primarily for young people starting out.” FALSE.

The minimum wage was established to ensure that jobs pay enough to support families. At its inception in 1938 it was set at about 50% of the wage paid to a typical (median) worker. But both the national minimum wage and Pennsylvania’s have fallen so low that they pay only 25% of a typical worker’s hourly earnings.

Today, more than 12% of the Pennsylvania workforce makes less than $15 per hour—that’s about 776,000 workers. That’s too many jobs to all be training jobs held by teenagers. In Pennsylvania, 1.34 million workers—21% of all workers—would have higher wages because of a $15-per-hour minimum wage. This includes the 776,000 who currently make less than $15 per hour and the 568,000 who currently make $15 or slightly more now and would see their wages rise because businesses don’t want to lose experienced workers About 84% of them are adults, 69% are white, more than 60% are women, 25.6% have some college education, 28% have children living with them, and a majority work full time.[1]

All these workers are critical to Pennsylvania businesses which in turn provide the goods and services we need. We owe essential workers a decent life and to get it we must adjust the minimum wage back to about half of a typical worker’s wage—around $15.

MYTH TWO: “Raising the minimum wage just increases the price of goods across the board.” FALSE.

An increase in the minimum wage may lead to a small increase in prices, but it would be far less than the increase in wages for three reasons: (1) Labor is only part of the cost of producing goods and services. (2) A higher wage reduces turnover and training costs for businesses, which saves them money. (3) A higher wage improves worker morale and productivity, which also saves them money.

A recent study in California found that a 25% minimum wage increase raised restaurant prices by only 1.45% in a state where tipped workers (waitresses, servers, etc.) get the same minimum wage as other workers.

State legislators who oppose the minimum wage are fond of talking about their friends who own pizza shops who say that they would have to drastically raise prices if the minimum wage were $15, which would force them to go out of business. Many even claim that the benefits of an increase in the minimum wage would be wiped out by the higher cost of pizza.

These pizza shop owners forget two things. First, even if they have to raise their prices a bit, other pizza shop owners—as well as the owners of other competing businesses—would have to as well, so they wouldn’t be at a competitive disadvantage. And second, they forget that wages are only part of the cost of doing business. There is also the cost of pizza boxes, ovens and the electricity to run them, and the raw materials of pizza. So, the increase in prices would be far less than the increase in wages.

We have tested this hypothesis. Every state around us has a higher minimum wage than Pennsylvania. Yet as we can see from the table below, though the average minimum wage in those states is 84% higher than Pennsylvania’s minimum wage, the price of a standard Domino’s pizza in those states’ capital cities averages only 8% higher than the price in Harrisburg. As of January 1 of this year, New York and New Jersey already have a $15.00 minimum wage, and Washington, DC’s minimum wage is $17.00. Yet the same Domino’s pizza is no more expensive in New Jersey and is only a dollar (or 9%) more in Washington, DC. It is $2 or 18% more in Albany, New York, than in Harrisburg. But New York’s minimum wage is 107% higher than Pennsylvania’s. Low-income New Yorkers are clearly ahead of those in Pennsylvania.

Pizza 2024

This evidence also shows that other factors besides the minimum wage affect pizza prices. A Domino’s pizza cost the same in Trenton, New Jersey, as it does in Harrisburg despite New Jersey’s much higher minimum wage. And it’s 18% less than the cost of pizza in Albany, New York, despite the two states having the same minimum wage.

There is also no evidence that the minimum wage has led to a pizza shortage in New York, New Jersey or Washington, DC. No one is crossing the border from New York or New Jersey to Pennsylvania in search of pizza at a lower price. And you can still buy a slice of pizza in New York Cit for $1.

But many Pennsylvanians are crossing the border to New York and New Jersey in search of higher wages. And, no doubt, some of them are buying groceries or pizza before they return to our state.

Finally, while the minimum wage would increase wages for 21% of Pennsylvania workers the small increase in prices would be concentrated in industries that mostly employ low-wage workers. Other sectors may also increase prices slightly as the prices they pay for goods produced by minimum wage workers would increase a bit. But since the increase in prices in industries that pay the minimum wage will be small, and the goods they produce are likely to be a small part of the costs of others businesses, the overall prices level would barely budge.

MYTH THREE: “Raising the minimum wage will hurt people earning $12, $15, $18 per hour right now.” FALSE

As I pointed out above, if the minimum wage goes up, those making just above the new minimum wage would see their salaries go up as well. So, those workers would also benefit from an increase in the minimum wage. And, ultimately, most other workers would too. In fact, an increase in the minimum wage would add a total of $5 billion to the wages of allPennsylvanians in the short term. And because all of those additional wages would result in new consumption, in the long term there would be a strong increase in business activity in the state. So, business activity would expand, unemployment would go down, and the wages of other workers would increase as well. Everyone would benefit, despite the slight increase in prices in limited sectors of the economy.

MYTH FOUR: “Raising the minimum wage will destroy small businesses.” FALSE.

Minimum wage workers work for big and small businesses, so a higher minimum wage in no way disadvantages small businesses—it establishes a level playing field.

A higher minimum wage can also benefit small businesses by reducing turnover and training costs and increasing worker productivity.

In addition, at a time when many small businesses can’t hire enough employees, raising the minimum wage would actually help not hurt them. When one business raises its wages to hire more workers, it might fear being put at a competitive disadvantage. However, if all businesses in a sector raise their wages, no one business would suffer, and they would all have a better chance of hiring more employees.

And finally, as the chair of the executive committee of the U.S. Chamber recently pointed out, when workers are paid more, they can spend more, which helps local small businesses.

And keep in mind that that small businesses, as well as workers, are harmed by the ability of the few wealthy corporations that dominate so many markets to hold down not just wages but what they pay small businesses. (Large corporations in concentrated industries are, to use the technical term, monopsonists Raising the minimum wage would thus help small businesses to counter the impact of the power larges businesses have over their prices. (And since that increase in prices comes out to the economic rents large corporations secure by means of their monopsony power, they will not be able to pass on the price increase to their own customers.) Again, this effect is small

MYTH FIVE: “Raising the minimum wage will lead to job loss.” FALSE.

There is no question that at some level, at, say, $30 or $40 per hour, raising the minimum wage would cost jobs. But no one is proposing such an increase. A great deal of recent research is consistent with earlier research showing that raising the minimum wage doesn’t reduce jobs—in fact, it often creates new ones by increasing consumption in local communities that in turn creates jobs.

A new study (see also here) by UC Berkeley economists of more than 750 counties found that increasing the minimum wage to $15 per hour by 2024 would likely boost incomes but would not lead to significant job losses. The radical economists (sic) at the N.Y. Federal Reserve found that when New York raised its minimum wage, but Pennsylvania did not, both wages and employment increased faster on the New York side of the state border than on the Pennsylvania side. The Keystone Research Center replicated that research for more recent years and found the same results.

Other studies and research analyzing data going back to 1979 have found a higher minimum wage has little or no impact on jobs. And, while some older studies and reports, such as those the Independent Fiscal Office relies on, reach different conclusions, a review by the Keystone Research Center points out that scholars’ consensus firmly supports the now large body of research that refutes these claims.

Given that a higher minimum wage doesn’t hurt businesses or lead to significantly higher prices, it’s no surprise that research shows a wage increase has little or no effect on employment.

Finally, we want to point out that the current low-unemployment economy, in which businesses are struggling to hire workers, is the best possible time to raise the minimum wage. Anyone who does lose a job would likely get another one quickly—and at higher pay.

MYTH SIX: Raising the minimum wage would push low-income workers off a benefit cliff leaving them even worse off. FALSE.

It’s a bit rich when the folks who have long fought against any program that helps working people or those with low incomes oppose raising the minimum wage on the grounds that it will make them worse off because their incomes would be too high to qualify for social safety net programs like SNAP (“food stamps”), Medicaid or Child Care Works. They never respond to that concern with the obvious answer: raise income limits.

Research by the Pennsylvania Budget and Policy Center in 2019 shows that very few families with low incomes would be worse off because an increase in the minimum wage would reduce their safety net benefits, and our recent update demonstrates that the obvious solution has been adopted. Recent changes to eligibility requirements for SNAP and Child Care Works have eliminated the benefit cliff problem. And of course, the expansion of those programs was enacted by supported of the minimum wage not opponents of it.

Here, as with the other five myths, the arguments of opponents of the minimum wage have become more implausible the more we learn about how the minimum wage works.

MYTH SEVEN: No one cares about the minimum wage any more. FALSE.

A May 2022 poll commissioned by the State Innovation Exchange found that 73% of Pennsylvanians support putting the state on a path to a $15-per-hour minimum wage. A majority of Pennsylvanians in every state House and Senate district, including the most Republican districts, agree.

CONCLUSION

Myths abound about the minimum wage because, like all myths, they serve the interests of the myth-makers. Unfortunately the influence of the vast majority of Pennsylvania workers are directly contrary to those of the myth makers. For the sake of the vast majority of working people in Pennsylvania, it’s time for the Pennsylvania Senate to follow the House and put Pennsylvania on a path to a $15 minimum wage.

[1] These data are from Claire Kovach, Who Benefits? The Demographic Impact of a Higher Minimum Wage in Pennsylvania, Keystone Research Center, February 1, 2024, https://keystoneresearch.org/wp-content/uploads/WhoBenefits_15by2026.pdf.

April 1, 2024

The Minimum Wage, the Contemporary Economy, and Economic Justice

By Policy Briefs

Access a printable version here.

Minimum Wage And Economic Justice

March 29, 2024

Pennsylvanians Together 2024 Narrative and Agenda

By Blog Post

Click here to read, print, or download.

Pennsylvanians Together Agenda 2024

March 27, 2024

STATEMENT: Celebrating the Landmark Affordable Care Act (ACA)’s 14 Years

By Press Statement

FOR IMMEDIATE RELEASE

March 22, 2024

CONTACT: Kirstin Snow, Communications Director snow@pennpolicy.org

STATEMENT ON 14th ANNIVERSARY OF THE AFFORDABLE CARE ACT

The landmark Affordable Care Act (ACA) was signed into law fourteen years ago on March 23, 2010, thanks to President Obama and the commitment of millions of advocates—including 25,000 in Pennsylvania—who worked for years, encouraging politicians to address the health insurance industry’s abuses and the needs of 50 million Americans who could not afford health insurance.

As its earlier incarnation, Pennsylvania Policy Center contributed to the victory as part of Health Care for America Now (HCAN), which was led in Pennsylvania by our executive director Marc Stier. Our deputy director, Levana Layendecker, served as the digital director of HCAN nationwide.

Fourteen years later, we celebrate a great deal of progress while recognizing that there is still much work to do. The ACA cut the rate of uninsurance in half nationwide and from 9.7% to 5.3% in Pennsylvania, bringing the number of uninsured people to a record low by making coverage in the ACA marketplaces more affordable and expanding coverage to low-income workers through the expansion of the Medicaid program.

A record number of Pennsylvanians—419,832—enrolled in ACA coverage this year a 13% increase over last year thanks to enhanced tax credits proposed by President Biden that make coverage more affordable and save enrollees an average of $800 annually.

Health disparities between white people and people in minority groups such as Native Americans, Blacks, Latinos, and immigrants have also shrunk because of the Affordable Care Act. These groups were the least likely to have insurance or to be able to afford coverage but have gained increased access thanks to the Medicaid expansion and reduced costs on the exchange.

The ACA didn’t just make coverage affordable and reduce the number of uninsured, it created new rules for insurance corporations that protect all of us from the worst insurance abuses and improve the quality of the coverage. For example, the ACA made it illegal for insurance to deny, drop or overcharge people with common pre-existing conditions like high blood pressure or diabetes or pregnancy. The ACA ended annual limits and caps on coverage. It ended discrimination in health insurance by making it illegal to charge women more than men for the same policy and by refusing coverage to someone because of their race, ethnicity or gender. In addition, the ACA created new standards for insurance policies that require all plans sold in the ACA marketplaces to include basic Essential Health Benefits like maternal and prenatal care, prescription drugs, and hospital care. The ACA also made preventive care like birth control, annual exams, mammograms, and colonoscopies free under all health plans, including Medicare.

The ACA has had a dramatic effect on the well-being of Pennsylvanians, reducing illness and medical bankruptcy. And, research shows that each year the ACA saves the lives of between 200 and 400 Pennsylvanians who would have otherwise died for lack of health insurance.

All of these features made the ACA the biggest achievement in healthcare since the 1960s passage of Medicare and Medicaid—but there’s still significant work to do to rein in insurance and drug corporations that continue to price gouge on premiums and medicines and to ensure that people in the states that have not expanded Medicaid get access to those benefits.

Moreover, there are some politicians, including former President Trump, who have not given up on repealing the law, and there continue to be court cases that try to dismantle the law piece by piece. Advocates must stay vigilant to protect and finish implementing the law.

Marc Stier, Pennsylvania Policy Center’s executive director and former state director of HCAN in Pennsylvania, said today, “The enactment of the ACA, thanks to the work of the HCAN campaign, remains a proud moment in my life as well as that of advocates throughout the state. And like any other Pennsylvanian, I can see the results close to home. My daughter has taken advantage of both the Medicaid expansion and health insurance in the ACA marketplace. And, two of our current staff members received what one called ‘unbelievably affordable’ coverage through the ACA marketplace that ‘saved me in the aftermath of the Great Recession” before joining us.”

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March 22, 2024

There’s a Crucial Need for OSHA Regulations in Safeguarding Public Sector Workers

By Blog Post

In Pennsylvania, OSHA (the Occupational Safety and Health Administration) regulations apply to most private sector employers and employees. However, public sector employees, including those working for “Section (3)(5) of the Occupational Safety and Health Act of 1970 specifically excludes Federal OSHA’s authority over employees of State and local government. The Act provides for States to assume responsibility for occupational safety and health programs under the state’s own plan, which must be approved by the U.S. Department of Labor.”

These protections implement lifesaving health and safety standards in the workplace as well as avenues to report violations and receive assistance. Amongst other protections, OSHA standards require private employers to: provide fall protection, ensure the safety of workers who are in confined spaces, provide protection against infectious diseases, and prevent exposure to harmful substances like asbestos or lead. Without regulation, all public employees are left vulnerable to dangers in their workplaces.

Public sector workers are essential to the functioning of society, providing vital services such as maintaining public infrastructure and ensuring public safety and health. Despite their crucial roles, these workers face myriad occupational hazards that can compromise their well-being. Public schools are a strong example of why health and safety regulations are necessary. Because school funding primarily relies on local taxes, lower-income communities are often left with severely underfunded public schools. Without OSHA protections, adequate funding to maintain building safety for employees and students is often overlooked in favor of other essential expenditures. Private school teachers can submit a complaint and request an OSHA inspection, but public school teachers cannot. That is wrong.

On the national level, state and local public sector employees are 64% more likely to be injured on the job than private sector employees.

Several workers’ unions have continued to push for legislative change via an OSHA-approved state plan that includes public employees and employers. Twenty-six U.S. states have already done so, including New York, New Jersey, Maryland, and Virginia. In the coming months, Pennsylvania state lawmakers will decide whether these valuable protections will be extended to public employees and employers.

In Pennsylvania, legislation passed the House (HB 299) with bipartisan support. Legislation has been introduced in the Senate but has not moved.

It is time for Pennsylvania to enact workplace safety legislation to protect all workers!

Read more:

Ockerman, Emma. “Worker injuries and deaths are still far too common: Americans are still dying from injuries on the job — but some workers are more impacted than others.” Market Watch. May 1, 2022. https://www.marketwatch.com/story/american-workers-are-still-dying-from-injuries-on-the-job-heres-who-is-most-impacted-11651016484.

Schmidt, Sophia. “Could PA finally extend OSHA protections to public school teachers and trash collectors?” WHYY.org. April 21, 2022. https://whyy.org/articles/could-pa-public-employees-finally-get-osha-protections/.

Website for Pennsylvania House Democrats. “House passes Harkins bill to bring OSHA safety protections to public workers,” by Rep. Patrick J. Harkins. www.pahouse.com. May 2, 2023. https://www.pahouse.com/Harkins/InTheNews/NewsRelease/?id=128804.

Henderson, David. “Every Pennsylvania worker deserves strong workplace safety protections.” Penn Capital-Star. May 3, 2023. https://penncapital-star.com/commentary/every-pennsylvania-worker-deserves-strong-workplace-safety-protections-opinion/.

March 22, 2024

RELEASE: New Tax Justice Campaign – Pennsylvanians Should Thrive, Not Just Survive!

By Press Statements

FOR IMMEDIATE RELEASE

March 19, 2024

Contact: Kirstin Snow, Communications Director, snow@pennpolicy.org

NEW TAX JUSTICE CAMPAIGN- Pennsylvanians Should Thrive, Not Just Survive

PA’s Tax System Is Upside-Down!

Harrisburg, PA—The Pennsylvania Policy Center, the statewide affiliate of the Center on Budget and Policy Priorities, and its action arm, Pennsylvanians Together, kicked off their Tax Justice campaign with a press conference in the Matthew J. Ryan Office Building-Main Steps, 451 N. 3rd St, Capitol Complex, Harrisburg, PA. The kickoff included proposals to raise revenue without it taking a dime from working families’ wages.

The event featured the following speakers:

Marc Stier, Executive Director, Pennsylvania Policy Center
Dwayne Heisler, Campaign Director, Pennsylvanians Together
Senator Art Haywood
Representative Elizabeth Fiedler
Representative Chris Rabb
Jacinta Burgess and Suzzanne Ott
Ritchie Tabachnick of the Patriotic Millionaires

The following are quotes from the event:

Marc Stier: “Tax justice means two things. First, fixing a system in which we tax work too much and wealth too little. And second, raising enough revenue from the ultra-rich and wealthy corporations to fully fund K-12 education and provide other public goods we need to enable everyone to thrive.”

Dwayne Heisler: “The truth is we can raise revenue without taking a dime from working families’ wages. We need tax justice in Pennsylvania.”

Senator Art Haywood: “Our tax system is rigged against us. Reducing taxation on everyday people and making the rich pay their fair share is the first step toward fairness.”

Ritchie Tabachnick: “Structural poverty is largely the result of government policy and decisions. The tax code is a big part of the problem and one that can be addressed. We are glad to see Pennsylvania embarking on a new path to address this injustice.”

Suzzanne Ott: “I make a good income and I don’t mind paying my share of taxes. But there is something deeply wrong with a system that asks me and people like me to pay a far greater share of my income than the very richest Pennsylvanians. And it’s not just the high taxes I pay that is the problem. It’s that when the very rich don’t pay their fair share, we all lose the resources we need to provide a good education and other services to everyone who needs them.”

Representative Rabb: “I’m proud to have introduced the Fair Share Tax Plan bill for four consecutive sessions because it holds to account the most privileged taxpayers who pay disproportionately less than the most precariously situated working families across our commonwealth. Money made on money should be taxed at a higher rate than money made on labor and sweat equity in business. In [a] state where the vast majority of taxpayers’ income comes from compensation via salary or hourly wages, a higher tax rate for classes of income that most wealthy Pennsylvanians report represents tax fairness that benefits everyone.”

Representative Fiedler: “It’s time for us to fully fund public services by ensuring the rich pay their fair share. The Fair Share Tax plan is part of that, as is the bill I have to repeal Pennsylvania’s uniformity clause. Money earned by welding a bridge or caring for people in a senior center isn’t the same as wealth made by a millionaire trading stocks or real estate. It’s different …. and it should be treated differently in terms of taxation.

For too long in Pennsylvania, the rich have paid too little in taxes, while the working class and poor people have paid too much. We’ve started to address this injustice, but there is much more that we can [do], and I believe in time, we will!”

What is tax justice?

Tax justice means that ultra-rich individuals and wealthy corporations pay what they owe.

It means that their share of taxes enables us to provide the common goods we all need to create a growing high-wage economy and a strong future for all of us.

Our campaign for tax fairness is for every Pennsylvanian, no matter where we were born, where we live, what we look like, or how much we have. Join your neighbors from around the state to tell the Pennsylvania General Assembly to pass tax justice legislation, including the Fair Share Tax plan, a severance tax on natural gas fracking, corporate tax reform, and a working families’ tax credit. And stand with us to support federal proposals to make billionaires and wealthy corporations pay their fair share.

We need tax justice to build a commonwealth and country where everyone, not just the ultra-rich, has the opportunity to thrive.

A video of the event can be found here.

Pennsylvanians Together is a campaign working to ensure that all Pennsylvanians can thrive—not just survive. For too long, we’ve let politicians, who serve the interests of corporations, and the rich divide us based on what we look like, where we come from, where we worship, how much money we have or whether we are native-born or immigrants. By dividing us, they have given us public policies that do too little to help most Pennsylvanians while making the rich and corporations even wealthier.

ADDENDUM: charts below

March 19, 2024

Pennsylvanians Together Campaign, Partners, Legislators Announce 2024–25 Governor’s Budget Priorities, “Survive and Thrive” Agenda

By Press Statement

FOR IMMEDIATE RELEASE

February 5, 2024

Contact: Kirstin Snow, Communications Director, snow@pennpolicy.org

Pennsylvanians Together Campaign, Partners, Legislators Announce 2024–25 Governor’s Budget Priorities, “Survive and Thrive” Agenda

Preview to Governor Shapiro’s Budget Address; New Campaign Director

Harrisburg, PA—Pennsylvanians Together (PT) campaign, Senator Haywood, Representative Fiedler, Representative Rabb, and several statewide partners announce the Survive and Thrive agenda for all Pennsylvanians, ahead of the Governor’s annual budget address.

They shared the PT agenda for working families, focused on raising the minimum wage, and enacting a state working families tax cut (a.k.a. state earned income tax cut), as well as the other items on the agenda for 2024, including expanding the Whole-Home Repairs program, driver’s licenses for all, and protecting our democracy.

Pennsylvanians Together is the new advocacy campaign led by the Pennsylvania Policy Center, Commonwealth Communications, SEIU State Council, and many of the leading grassroots advocacy organizations in the state: Action Together NEPA, All Voting Is Local, Better Pennsylvania, CASA, For Our Future PA, Make The Road PA, One Pennsylvania, Pennsylvania United, and POWER.

PT also announces that Dwayne Heisler has been appointed its new campaign director. In response to his appointment, Heisler said, “There exist numerous avenues through which our state government can enhance its service to the people of Pennsylvania, particularly those facing challenges or being left in the margins. I take great pride in joining forces with Pennsylvanians Together and citizens across the Commonwealth, united in the mission to ensure that political representatives, opinion leaders, grassroots organizations, and the citizens of Pennsylvania are equipped with the necessary tools to foster the growth of our vibrant democracy, safeguard our freedoms, and pursue economic justice,” said Heisler.

Marc Stier, executive director of the Pennsylvania Policy Center and founder of PT said, “Pennsylvanians Together will carry on and expand the work of the previous We The People-PA campaign. Our goal is to ensure that all Pennsylvanians, no matter what they look like, where they live, or where they were born, have an opportunity not just to survive but thrive in growing an economy that works for all of us. Fighting for an open and truly representative democracy is critical to that goal. Our initial agenda announced today is focused on lifting wages and cutting taxes for people with low incomes as a start. We will soon be announcing a tax fairness agenda as well.”

Representative Chris Rabb added, “Whether it’s advocating for tax fairness to make the ultra-rich pay their fair share or transitioning the minimum wage into a family-sustaining wage, Pennsylvanians deserve budget priorities that promote shared prosperity and more opportunity to not just get by but thrive.”

“Right now, working people across the Commonwealth are sitting down to file their taxes and facing another reminder of Pennsylvania’s unjust tax system,” said Representative Elizabeth Fiedler. “Our lowest-income taxpayers should not be paying more than double the tax rate of the top 1%. I look forward to working with Pennsylvanians Together to advance my combined reporting bill, which would require corporations pay their fair share to help fund our communities.”

“Action Together NEPA is proud to be a member of the Pennsylvania[ns] Together leadership team. The goals of our coalition are achievable for the people of Pennsylvania when we all work together, and Pennsylvanians Together gives us an opportunity to do just that. Building an equitable, thriving commonwealth starts with ensuring that all Pennsylvanians have the tools and opportunities they need to build a brighter future for themselves, their families, and their communities. This year we look forward to advocating for the policies of the Pennsylvanians Together agenda, including raising the minimum wage, passing tax cuts for working families, and expanding the Whole-Home Repairs program,” said Alisha Hoffman-Mirilovich, Executive Director, Action Together NEPA

Jess Bigirindavyi, Democracy Defense senior manager, All Voting Is Local, said, “If we truly want to ensure that our votes are being cast in a safe, efficient, and legal manner, we must fully fund our elections offices. A fully funded elections system would include clearer directions for voters that results in less confusion, better poll worker training that results in less mistakes at voting sites, and more drop box availability across the Commonwealth. All of this would lead to increased confidence in the Pennsylvania elections.

She added, “We must properly fund county boards of elections across the state to recruit poll worker staff and advertise to recruit them. Poll workers make our elections go. They are vital to our democracy, working in a responsible way to make it possible for voters to cast a ballot that will be fairly counted and help make sure our election system is fair and transparent. “

“We are thrilled to have Dwayne Heisler join the Pennsylvanians Together campaign as our new campaign director. With his extensive experience and strategic leadership, we know Dwayne will drive our campaign forward so we can help press lawmakers to focus on priorities that help working families thrive. From raising the minimum wage to protecting Pennsylvanians in the workplace to making our tax system more fair for lower and middle-class families, Better PA is excited to continue the important work with Pennsylvanians Together with Dwayne in this critical role,” concluded Angela Valvano, Executive Director, Better PA.

Pennsylvanians Together is a campaign working to ensure that all Pennsylvanians cannot just survive—but thrive. For too long, we’ve let politicians—who serve the interests of corporations—and the rich, divide us based on what we look like, where we come from, where we worship, how much money we have or whether we are native-born or immigrants. By dividing us, they have given us public policies that do too little to help most Pennsylvanians, while making the rich and corporations even wealthier.

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Correcting the typo in the name of the coalition: “Pennsylvanians Together:, not “Pennsylvania Together” [GU1]

February 19, 2024

Syringe Services Programs Would Save the Lives of Thousands in PA

By Blog Post

The Pennsylvania Legislature needs to pass HB 1245, legislation that would legalize syringe services programs across the Commonwealth.

Pennsylvania families and communities are being devastated by the loss of loved ones. Opioid overdose deaths are entirely preventable, yet we lost more than 5,100 of our neighbors to drug overdose in Pennsylvania in 2022.

The number of overdoses in Pennsylvania, as well as the rate of increase, has long been among the highest in the nation, yet we are one of only about ten states that do not allow statewide syringe services programs (SSPs). Syringe services programs are a critically important tool in the fight to reduce overdose deaths and prevent the spread of injection-related diseases like HIV and hepatitis C. The programs also serve as distribution points of naloxone (Narcan), and they provide overdose reversal trainings to communities. With only two legal SSPs in Pennsylvania, most of the state is left uncovered or reliant on the few unofficial programs we have, which are under-resourced.

Syringe services programs benefit everyone. They not only provide caring centers where people can access social services and treatment but also

decrease reliance on emergency services.
dramatically reduce the spread of bloodborne diseases such as hepatitis C and HIV.
decrease public needle trash.
reduce healthcare costs in local municipalities.
increase success rates of drug treatment and housing programs.

An estimated 85% of Pennsylvanians who meet the criteria for having a substance use disorder and need drug treatment do not receive it. Making treatment more accessible is critical, and research shows that new users of SSPs are both five times more likely to enter drug treatment and about three times more likely to stop using drugs than those who don’t use the programs. Legalizing SSPs would provide more effective paths to successful, long-term treatment, and it would save lives.

The overdose crisis affects communities across our commonwealth, crossing boundaries of city, town, race, age, economic status, and gender. Drug overdoses are a public health crisis. We have seen time and time again that drug war policies and criminalizing harm reduction strategies have not resulted in reduced rates of overdose death or drug use — in fact, they have led to the opposite.

Passing HB 1245 should be an easy, commonsense decision. It’s a long-overdue step forward in preventing the spread of HIV and other communicable diseases, helping people with substance use disorders access the services and treatment they need, and saving lives.

All Pennsylvanians deserve access to life-saving interventions and care. We strongly urge members of the House Judiciary Committee to vote YES on HB1245. It’s time to join the majority of other states in the nation by legalizing syringe services programs.

February 14, 2024

STATEMENT on Governor Shapiro’s 2024–25 Budget Address

By PA Budget, Press Statement

FOR IMMEDIATE RELEASE

February 6, 2024

Contact: Kirstin Snow, Director of Communications, snow@pennpolicy.org

STATEMENT on Governor Shapiro’s 2024–25 Budget Address, Pennsylvania Policy Center

A Pennsylvania Budget To Celebrate

Overview

Governor Shapiro took office a year ago at a time when there was a great deal of uncertainty about the economy and the fiscal state of Pennsylvania, and in the wake of a Commonwealth Court decision holding that Pennsylvania’s system of funding public schools is unconstitutional. There was little time for a new administration, led by a new governor and an entirely new set of cabinet members, to develop a long-term plan to address the school funding question. Accordingly, the administration said that its initial budget would be followed by a second-year budget, which would fully address the constitutional mandate to fund K–12 education fully and fairly and other issues. And when we reviewed the budget presented by the Governor last year, we concluded that it set forth the right priorities but did not provide enough funding to meet the needs it identified.

We are very pleased to say that the budget presented by Governor Shapiro today not only has the right priorities but provides the funding needed to meet them, at least in the next fiscal year. The investments the Governor proposes for public K–12 education, higher education, economic development, housing, the minimum wage, and other priorities are substantial and bold. And as important as the new proposed funding is, the Governor’s budget also recognizes the need for Pennsylvania to do some things differently in all these areas.

If adopted by the General Assembly, the Governor’s proposal would put us on a path to answering the impassioned call for adequately and equitably funding schools made by our young people, their parents, and other Pennsylvanians, who have long understood that equality of opportunity, prosperity, and democracy are intricately linked to the education the state provides them.

This proposal is the first step in answering their prayers, and we applaud Governor Shapiro for embracing the BEFC report and adopting its first-year plan in his budget. We think Pennsylvanians should celebrate this budget and work with Governor Shapiro to see it enacted this year.

Our only concern about this budget presentation is that it proposes new investments in K–12 education for only one year. The administration embraced the Basic Education Funding Commission’s seven-year plan to lift state support of K–12 to a level that would meet our moral and constitutional responsibility to fund our schools fully and fairly. However, the long-term budget outlook in the Executive Budget plan released today only contains the first year of the seven-year plan needed to meet that responsibility. The statement of the Governor’s priorities does say that the additional educational investment next year is just the “first year adequacy investment as recommended by the BEFC.” So, we are confident that Governor Shapiro intends to follow through on the commitment to the full seven-year plan his representatives on the Basic Education Funding Commission, as he is both personally committed and constitutionally required to adequately and equitably fund our schools. But the true cost of that plan—and the revenues needed to fund it—are not apparent in the budget documents submitted today. Pennsylvanians deserve a transparent budget process that allows us to consider the alternatives before us.

For the full analysis, click here.
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February 6, 2024

A Pennsylvania Budget to Celebrate

By Budget Analysis, PA Budget, Policy Briefs, Policy Statement

A Pennsylvania Budget to Celebrate

Note: This is an initial review of the fiscal year 2024–25 budget proposed by Governor Josh Shapiro on February 6, 2024. As we delve deeper into the budget we may need to revise or modify the conclusion reached here. Also note that rather than providing one lengthy, in-depth analysis of the entire budget seven weeks or so after it is released, as was done by the previous affiliate of the Center on Budget and Policy Priorities, we will be rolling out our in-depth analysis over the next seven weeks in a series of reports.

Overview

Governor Shapiro took office a year ago at a time when there was a great deal of uncertainty about the economy and the fiscal state of Pennsylvania, and in the wake of a Commonwealth Court decision holding Pennsylvania’s system of funding public schools unconstitutional. There was little time for a new administration, led by a new governor and an entirely new set of cabinet members, to develop a long-term plan to address the school funding question. Accordingly, the administration said that its initial budget would be followed by a second-year budget that would fully address the constitutional mandate to fund K–12 education fully and fairly and other issues. When we reviewed the budget presented by the Governor last year, we concluded that it set forth the right priorities but did not provide enough funding to meet the needs it identified.

We are very pleased to say that the budget presented by Governor Shapiro today not only has the right priorities but provides the funding needed to meet them, at least in the next fiscal year. The investments the Governor proposes for public K–12 education, higher education, economic development, housing, and other priorities are substantial and bold. And as important as the new funding proposed is, the Governor’s budget also recognizes the need for Pennsylvania to do some things differently in all these areas.

If adopted by the General Assembly, the Governor’s proposal would put us on a path to answering the impassioned call for adequately and equitably funding schools made by our young people, their parents, and other Pennsylvanians who have long understood that equality of opportunity, prosperity, and democracy are intricately linked to the education the state provides our children.

The proposal is the first step in answering their prayers, and we applaud Governor Shapiro for embracing the BEFC report and including the first year of its seven year plan in his budget. We think Pennsylvanians should celebrate this budget and work with Governor Shapiro to see it enacted this year.

Our only concern about this proposal in the Executive Budget book is that it proposes new investments in K–12 education for only one year. The administration embraced the Basic Education Funding Commission’s seven-year plan to lift state support of K–12 to a level that would meet our moral and constitutional responsibility to fund our schools fully and fairly. However, the long-term budget outlook in the Executive Budget plan release today only contains the first year of the seven-year plan needed to meet that responsibility. The statement of the governor’s priorities does say that the additional educational investment next year is just the “first year adequacy investment as recommended by the BEFC.” So, we are confident that Governor Shapiro intends to follow through on the commitment to the full seven-year plan made by his representatives on the Basic Education Funding Commission, as he is both personally committed and constitutionally required to adequately and equitably fund our schools. But the true cost of that plan—and the revenues needed to fund it—are not apparent in the budget documents submitted today. Pennsylvanians deserve a transparent budget process that allows us to consider the alternatives before us.

The Budget Overall

The Governor proposes a General Fund budget of $48.3 billion, 8.4% more than the current fiscal year budget of $44.6 billion. This is a substantial increase, but a necessary one. In evaluating the overall size of the budget, it is important to keep in mind two important things. First, looking just at the budget number can be misleading. As our economy and population grow, and inflation occurs, the state budget necessarily must grow. The best measure of the impact of the state budget on our economy is not the number of dollars spent but the proportion of the Gross State Product (GSP) of Pennsylvania that flows through state government. The Governor’s proposed expenditures, if accepted by the General Assembly, would equal 5.02% of the projected GSP of $940 billion.[1] This is higher than the average 4.36% of GSP in Governor Wolf’s budgets. But, it is in line with the 4.66% average during the fifteen years before Governor Corbett. Governor Shapiro is not proposing a major expansion of state government but, rather, a return to the historical path the state budget was on before the sharp budget reductions of the Corbett years.

The second key point to remember in evaluating the overall size of the budget is that Pennsylvania has been falling behind in meeting many responsibilities, not just the responsibility to educate our children at all levels. We have suffered from a severe public investment deficit. For the last decade, our public schools have been among the most unequally funded in the country; we are fourth from the bottom in higher education funding (and near the top in the cost of public higher education); our public health spending is close to the bottom; we have cut funding for environmental protection even as the need to protect ourselves from the dangers of natural gas fracking has increased the demands for environmental inspectors; we provide less than other states in support for those with mental health issues; and so on. The result of the public investment deficit is that inequality in our state has increased, and our economy has been growing too slowly. It is going to take higher budget levels this year and, in the future, to close the public investment deficit gap.

Education

Governor Shapiro’s recommendation for education funding closely follows the plan put forward by the BEFC. It calls for over $1 billion in new basic education funding to our five hundred school districts divided into three buckets:

$736,000,000 is targeted to school districts that are inadequately funded by the state’s own criteria and as established by the BEFC.
$136,000,000 is targeted to school districts that have higher-than-average property taxes because they have had to rely on local funds to make up for inadequate state aid.
$200 million will be distributed through the Fair Funding Formula to all five hundred school districts to ensure that state support keeps up with the inflation in education costs.

The Shapiro proposal also accepts the BEFC recommendation to update the current funding formula to improve predictability and stability of funding. The administration embraces the BEFC plan to smooth the poverty factors in the formula to ensure that temporary jumps or statistical anomalies in poverty rates do not lead to sharp changes in state funding. They also call on the General Assembly to reset the BEF base to the 2023–24 allocation. New education funding to school districts in future years would be added to the 2023–24 funding level rather than the 2014–15 level. This means that the school districts that see a decline in the number of students would be protected from a drastic reduction in state funding.

Altogether, total funding for basic education would reach $8.9 billion in FY 2024–25.

The Governor also calls for

a $50 million increase in special education funding, a 4% increase over FY 2023–24.
a $2.4 million increase for career and technical education, a 2% increase over FY 2023–24.
a $7 million increase for dual enrollment programs.

In addition, he calls for $300 million per year for repairing dilapidated and toxic school buildings.

The Governor also proposes to reform the way school districts pay for cyber charter schools. Currently payment rates range from $8,639 to $26,564 per student per year. These payment variations are not at all related to the actual cost of educating children in cyber charter schools. The Governor proposes a fixed $8,000 payment per student per year. This plan would save school districts, including many rural school districts, a total of roughly $262 million per year.

Early Childhood Education

Governor Shapiro proposes $32 million in new funding for early childhood education programs, including $30 million for Pre-K Counts, an 11% increase over FY 2023–24; $2.7 million for Head Start, a 3% increase over FY 2023–24; and a $17 million increase for Early Intervention, a 5% increase over FY 2023–24.

These proposals are not only welcome but bold. But, as we mentioned above, they are for one year only. The Basic Education Funding Commission proposal, which Governor Shapiro’s representatives voted for, made clear that reducing the adequacy gap in funding our 500 school districts, as well as addressing tax inequity, would require an additional investment at this scale seven years in a row. At the end of the seven-year plan, state spending on K–12 education would be $6 billion higher than it would have otherwise been. However, the five-year plan in the Executive Budget shows flat funding for education in the four years after FY 2024–25.

It is not uncommon for the out years in a governor’s budget proposal to project flat funding of many budget lines combined with a mixture of conjecture and fantasy about possible future initiatives and revenues. So, we are not concerned about what we don’t see in the future projections of education funding. We trust in the Governor’s endorsement of the BEFC report and the bold rhetoric in his speech today about the necessity of providing an adequate education to all the children of Pennsylvania. But, as we will show below, excluding future increases in education funding from the long-term budget outlook could create a misleading picture of the fiscal status of the Commonwealth and the eventual need for new recurring revenues to both balance the budget and fund education fully and fairly.

Higher Education

The Executive Budget calls for major changes in the way higher education is governed and funded in Pennsylvania. We can’t speak to the details of this proposal here as some of them are not clear and the impact of others requires more careful consideration than we can provide today.

The good news is that Governor Shapiro recognizes that our state has been disinvesting in higher education for thirty years with the result that tuition at PASSHE and community colleges are among the highest in the country, even relative to median income. Because of the high tuition, there has been a drastic decline in enrollment, far greater than is caused by the decline in the number of high school graduates. Pennsylvania has tens of thousands of open jobs that require higher education. Even worse, many Pennsylvanians leave the state to attend less expensive colleges in other states and, too often, they do not return.

To deal with these issues the Governor proposes both structural changes and new funding. He calls for consolidating the PASSHE and Community College systems under one board and administration. We will consider this proposal in greater detail later in the year, but we do think there are two points in its favor. First, it is vital to the success of higher education in Pennsylvania that students graduating from community colleges have a smooth path to finishing a four-degree at a state university. Combining the operations of the two systems may well make those transitions easier. And second, we believe that in the last forty years colleges and universities have spent too much on administration and too little on faculty members and vital support services. Consolidating the two systems would reduce the administrative overhead of both systems.

Recognizing the need for new funding to reduce tuition, the Governor proposes an additional $127 million in funding for the combined PASSHE-Community College system and $31 million for the state-related universities: Lincoln University, Temple University, The University of Pittsburgh, and Pennsylvania State University. Total higher education funding would rise from $1.54 billion to $1.7 billion. He also calls for changing the way the state-related universities are funded to remove the requirement that such funding receive a vote of two-thirds of the House and Senate. This important step is needed to reduce micromanagement of these universities by the General Assembly.

The consolidation and new funding proposals this year, and one promised for 2025–26, would allow the state to ensure that any student whose family income is less than the median family income in the state would be able to attend a community college or state system university for no more than $1,000 in tuition and fees per semester. Students attending state-related universities would see a $1,000 increase in their Pennsylvania Higher Education Assistance Agency (PHEAA) grant, bringing it to $6,750 per year. This bold plan promises to make a college education far more affordable, especially for families with low and moderate incomes, enabling our community college / state university systems to once again be the engines of economic opportunity they were in the past and thereby providing the education and training needed to drive our economy forward in the future.

Building a Strong Economy

Governor Shapiro has long recognized the importance of state support for economic development beyond that which is provided by a strong education system. He has created a new economic development strategy that promises not only to attract new businesses to the state but also help existing businesses expand. He proposes a total of $600 million in new and expanded investments to enhance the Department of Community and Economic Development work in this area.

This new investment would be distributed among a number of different programs, including

$500 million for the PA SITES program, which provides funds for on-site development for priority industries, including agriculture and manufacturing. It would be paid for by a taxable bond issue.
$20 million in new funding to leverage Pennsylvania’s research and development assets.
$3.5 million to create the Pennsylvania economic competitiveness challenge to encourage the creation of regional development strategies.
$25 million for the new Main Street Matters program that would build on the work of the Keystone Communities and Main Street and Elm Street programs that have helped local governments create vibrant downtowns.
$21.5 million in funding for tourism and business marketing.
$2 million in funding to support internships.
$10 million in new funding for the Department of Environmental Protection to hire new staff and improve IT systems to expedite permitting approvals.
$10.3 million in funding for agricultural innovation.
$5.6 million for the dairy industry.

While it is included in a separate category in the Governor’s budget, we want to note that the new investments in career and technical education discussed above are critical to any successful economic development strategy. We continue to believe that the best way forward to a strong future economy is to invest in people. Businesses come and go. But a well-educated and trained workforce is a major attraction to new businesses and those seeking to expand their operations in our state.

Minimum Wage

Raising the minimum wage is long overdue. At a time when every state around us is moving quickly to a $15 minimum wage, Pennsylvania’s minimum wage is not only a moral embarrassment but also a barrier to economic growth. The minimum wage has not been increased for 14 years. Many Pennsylvanians seek work in neighboring states to earn higher wages. And they spend some of what they earn in those states as well, depriving Pennsylvania businesses of their patronage. Indeed, low wages hold back economic growth and hurt local businesses all over the Commonwealth. So, we are glad to see Governor Shapiro again propose an increase in the minimum wage to $15 on January 1, 2025. It is imperative that the Senate follow the House in embracing this proposal. We would also like to see the General Assembly end the tipped minimum wage, allow local governments to set a minimum wage higher than the state level, and create an automatic cost-of-living increase in the minimum wage.

According to data from the Keystone Research Center, raising the minimum wage to $15 per hour would increase the wages of 1.34 million Pennsylvanians. More than 21% of Pennsylvanians would see their wage go up. This would lead to an increase in consumer spending of $5 billion dollars, giving our economy a strong push upwards. A majority of the people who would see their wages go up are women and full-time workers—and over a quarter of minimum wage workers have a child. About 21% of them live in cities, and 25% live in rural areas. An increase in the minimum wage to $15 would add $56 million to state revenues and would reduce state expenditures for Medical Assistance and other safety net programs by roughly 20–30 millions of dollars.

Public Transportation

Another important component of a successful economic development strategy, and especially one that seeks to expand opportunities for low- and moderate-wage workers, is public transportation. Public transportation is not just critical in our largest cities. Many smaller cities, and even some more rural counties, have public transportation systems that make it possible for workers to get to their jobs. Thus, we welcome the Governor’s advocacy for adding 1.75% of sales tax revenue to the Public Transportation Trust Fund, which would provide $283 million dollars for operating subsidies for transportation agencies across the state.

Child Care

Child care remains a critical priority for all parents with young children and yet is often not easy to afford. And child care jobs have historically paid too little to ensure that our most precious resource, our children, are well cared for. Governor Shapiro’s budget leverages a small state investment to secure $62 million in new federal funding that would increase reimbursement rates for child care providers taking part in the Child Care Works program, raising their pay to the 75th percentile of the current market costs of child care services.

Housing

Affordable housing is in increasingly short supply as the 2008 financial crisis and the pandemic recession slowed housing development. Governor Shapiro proposes two initiatives to make affordable housing more accessible. First, he calls for additional funding for the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE), which helps people become homeowners, helps Pennsylvanians stay in their homes, and provides funding for local communities seeking to remove blight.

The Governor also proposes an additional $50 million for the whole home repairs program which provides funds for low-income Pennsylvanians to repair and upgrade their homes.

While these are important initiatives, we fear that they do not do enough to address a growing crisis—and not just in low-income communities. In the near future, we will be proposing additional ideas to deal with this crisis, such as expanding the Property Tax Relief and Rent Rebate program to low-income Pennsylvanians under the age of 65.

Revenues: Short-Term

The Governor’s budget is funded by a combination of recurring revenues and a drawdown of $3.2 billion of the more than $14 billion in the state surplus, which includes both the General Fund surplus and the Rainy Day Fund. Drawing down this surplus is entirely appropriate. The surplus came from our tax dollars and should be spent to benefit the people of our state. Those funds should not be left sitting in a bank account in Harrisburg.

The Governor also proposes two new sources of revenue: legalizing adult-use cannabis and new skill games. Legalizing adult-use cannabis is long overdue, both because it raises revenue and because it ensures that no one goes to jail for violating a law that is unevenly enforced and widely disregarded. The Governor proposes that some of the funds raised from a tax on cannabis use be returned to communities that have been disproportionately harmed by the enforcement of our cannabis laws. The tax on cannabis sales would not raise new revenues in the next budget year but promises to do so in the future. Indeed, we believe that the Governor’s long-term estimates of the revenue that can be raised are extremely conservative.

The Governor also proposes an expansion of video skill-based gaming that would generate $150 million in revenue in 2024–25, mostly through the sale of licenses to those who plan to offer these new gaming opportunities.

We do not support this gaming initiative. Gambling has repeatedly been shown to raise less revenue than expected. Even worse, it is a regressive way to raise state revenue. People with lower incomes tend to lose a larger share of their income than those with high incomes. We should be seeking revenue from people who gamble on stock and bond prices.

Revenues: Long-Term

Finally, we come to the long-term implications of Governor Shapiro’s budget plan. As we pointed out above, the Executive Budget does not provide any details about education spending beyond the next fiscal year. However, the Governor has indicated that his proposal for next year is, as the BEFC recommended, the first step in a longer term, seven-year project.

Even after drawing down $3.2 billion from the $13 billion dollar surplus, a large surplus would remain. And, even after leaving aside a significant amount in the Rainy Day Fund, the surplus would be large enough to support the second and third years of the full seven-year program. But after that, new and recurring revenues would be needed to complete the full program and meet our constitutional and moral responsibility to adequately and equitably fund K-12 education.

The Pennsylvania Policy Center will soon provide a detailed analysis of the cost of enacting the BEFC proposal over the next seven years and make some recommendations about how to fund it. Here we will simply say that the Governor’s long-term education program can be funded without taking a dime from the wages of any Pennsylvanian. All we have to do is enact what we call the Fair Share Tax Plan, which cuts taxes on earned income, wages, and interest, while raising taxes on unearned income—that is on income from wealth. Currently, the bottom 20% of families in Pennsylvania pay 15% of their income in state and local taxes, and the middle 20% pay 11.4% of their income in state and local taxes. This is all while the richest 1% of Pennsylvanians pay on 6% of their income in state and local taxes. We can fully and fairly fund K-12 and higher education in Pennsylvania just by asking the richest Pennsylvanians to pay the same share of taxes paid by the poorest Pennsylvanians.

[1] We are using the GSP projections in the Governor’s Executive Budget 2024–25, p. A1–23. These projections are slightly higher than those of the IFO, but we believe that both projections are quite conservative.

February 6, 2024

38 Statewide Orgs Call on PA Congress Members to Pass Bipartisan Child Tax Credit

By Press Release

FOR IMMEDIATE RELEASE

January 29, 2024

Contact: Kirstin Snow, snow@pennpolicy.org

Nearly Forty Statewide Organizations Call on PA Congressional Delegation to Pass Bipartisan Child Tax Credit

Harrisburg, PA — Today a diverse, ad hoc coalition of 38 organizations in Pennsylvania sent a letter to the state’s congressional delegation, urging Senator Bob Casey, Senator John Fetterman, and Pennsylvania’s 17 US representatives to support and champion a bipartisan bill that would cut childhood poverty by expanding the Child Tax Credit (CTC). The Tax Relief for American Families & Workers Act (House Resolution 7024) would expand the CTC and benefit 19 million children in low-income families — 1 in 5 children under age 17 — including more than half a million (506,000) in Pennsylvania. The bill was advanced by the House Ways and Means Committee earlier this month in a 40–3 vote and could come to the House floor this week.

The Pennsylvania Policy Center (PPC), one of the groups that signed the letter, found in its analysis of the legislation that the expansion of the CTC would lift 400,000 children nationwide out of poverty in the first year, including 16,000 in Pennsylvania. Another 3 million kids across the county would be made less poor — 120,000 of them in Pennsylvania. At present, 19 million children in the country receive less than the full credit because of the current “refundability cap,” which limits benefits to families with incomes below $40,000. In a January 19th statement, PPC reported that the proposed legislation lifts the cap from the current limit of $1,600 per child to $1,800 per child for tax year 2023 and $1,900 per child in tax year 2024, lifting the cap entirely in 2025 so that the maximum credit of $2,000 will be available to all families.”

Organizations that signed the letter include the United Way of Pennsylvania, regional and local food banks, Latino advocacy organizations, and progressive activists’ groups. The letter notes that the temporary expansion of the CTC in 2021 under the American Rescue Plan was much larger than what is proposed in HR 7024, stating that “we fervently hope that a similar program will be enacted in the future … [but the] current legislation, which is rightly targeted to benefit the lowest-income families, is a necessary and promising first step in that direction.”

LIST OF SIGNERS:
AccessMatters
Action Together Northeastern Pennsylvania
Americans for Democratic Action Southeastern Pennsylvania
CASA / CASA in Action
Ceiba
Children First
Coalition for Low Income Pennsylvanians
Community Legal Services
The Council of Southeast Pennsylvania
Cumberland County Food System Alliance
Food Helpers/DBA Gr. Washington County Food Bank
The Food Trust
Greater Philadelphia Coalition Against Hunger
Helping Harvest Fresh Food Bank
The HUB for Progress
Hunger-Free Pennsylvania
Indiana County Community Action Program, Inc.
Just Harvest
Lycoming County Progressives
Make the Road Pennsylvania
Manna on Main Street
Mercer County Food Bank
National Council of Jewish Women – Pennsylvania
New Pennsylvania Project
NextGen America
One Pennsylvania
Partnership for Better Health
Pennsylvania Policy Center
Philabundance
Philly Neighborhood Networks
Pittsburgh Food Policy Council
Project SHARE of Carlisle
School Nutrition Association of Pennsylvania
Share Food Program
Shippensburg Produce Outreach, Inc
United Way of Pennsylvania
Westmoreland Food Bank

###

Statement on Federal Child Tax Credit Expansion – Pennsylvania Policy Center

A post from Pennsylvania Policy Center on Pennsylvania Policy Center provided by: https://pennpolicy.org

January 29, 2024

Statement on Federal Child Tax Credit Expansion

By Blog Post, Press Statements

STATEMENT on Child Tax Credit Expansion – Marc Stier, Executive Director, Pennsylvania Policy Center

The House Ways and Means Committee today voted in favor of bipartisan tax legislation that includes an expansion of the child tax credit along with the restoration of some expired business tax credits. The legislation is the product of negotiations between the chair of the House Ways and Means Committee, Jason Smith (R-MO) and the chair of the Senate Finance Committee, Ron Wyden (D-OR).

This legislation would benefit 19 million children in low-income families, or 1 in 5 of children under 17, including 506,000 children in Pennsylvania. It would especially help Black, Latino, and Asian children, whose parents are overrepresented in low-paying jobs due to structural barriers to opportunity.

In the first year, the expansion of the child tax credit would lift 400,000 children nationwide—and roughly 16,000 kids in Pennsylvania—out of poverty. Additionally, another 3 million kids nationwide, and 120,000 in Pennsylvania, will be made less poor.

The child tax credit gives families a refundable credit of 15% of their earnings above $2,500—which means that the family receives a cash benefit if they have no federal tax liability. The law makes three important changes in the child tax credit that provides additional benefits to low-income families.

At present, 19 million children in the country receive less than the full credit because of the current “refundability cap” that limits benefits to families with incomes below $40,000. This legislation lifts the cap from the current limit of $1,600 per child to $1,800 per child for tax year 2023 and $1,900 per child in tax year 2024. In 2025, the cap would be lifted entirely and the maximum credit of $2,000 will be available to all families.

In addition, under current law, many low-income families with two or three children receive the same credit as a family with one child at the same earning level. The legislation would allow a credit for each child in a family as is now the case for higher-income families. So, for example, a single parent with two children who earns $13,000 working part time as home health aide currently receives a refundable tax credit of $1575, which is 15% of their earnings above the $2,500. Under the new law, the family would receive $1,575 per child or a total of $3,150.

Finally, the proposed legislation adopts a lookback provision that allows families whose earnings decline in a year to use the prior year’s income to calculate their tax credit. This would help families who experience a temporary drop in their income from also suffering a drop in their child tax credit. This is especially important because of the volatile nature of the low-income job market.

A number of business tax credits are restored as part of the compromise legislation. While we at the Pennsylvania Policy Center have some doubts about the usefulness of these provisions, we welcome this compromise because the benefits to low-income children are so important.

The expansion of the child tax credit under the American Rescue Plan was much larger than under this proposal—and we fervently hope that a similar program will be enacted in the future. Democrats recently put forward a slightly bigger program that would have increased the tax credit for low-income families even more, by ending the exemption of the first $2500 in earnings in the calculation of the credit, and by raising the 15% phase-in rate. But this current legislation, which is rightly targeted to benefit the lowest income families, is a necessary and promising first step in that direction.

The entire program is, rightly, paid for by making administrative and enforcement changes to the Employee Retention Credit, a provision added to the tax code during COVID that has been abused.

January 19, 2024

Statement in response to the Basic Education Funding Commission Report

By Blog Post, Policy Statement

The adoption of the Basic Education Funding Commission Report yesterday is a major step forward in meeting our constitutional and moral responsibility to fund education fully and fairly in Pennsylvania.

The first step in this process was a Court decision by a Republican judge holding that our current system of funding education is not constitutional.

Yesterday, the state took a second step. We are grateful that a majority of the Commission, including the Governor and the members of the General Assembly, provided a detailed and specific plan to meet the constitutional and moral requirement of adequately and equitably funding our schools—a plan we believe is fair.

The plan comes very close to meeting our expectations. It sets a plausible and defensible standard for evaluating the adequacy of funding in every school district. By that standard, we need $5.4 billion per year in new funding to close the adequacy gap in a majority of the state’s five hundred school districts. The plan calls for a minimum of $200 million per year in additional basic education funds to account for inflation, which will flow through a slightly revised and improved fair funding formula And it calls for $900 million in funding to reduce the tax burden in school districts that have been taxing themselves heavily due to insufficient funding for education from the state.

The $6.3 billion in new, yearly funding will be phased in over seven years. While this is a bit slower than we had hoped, the delay is understandable. Given Pennsylvania’s severe shortage in teachers, it is not clear that school districts could spend much more in the initial years of the plan than the almost $800 million in new funding the proposal. Giving school districts a long-term plan with assured funding will enable them, and the institutions in the state that train teachers, the time to recruit a new generation of educators for our kids.

While not every member of the Commission supported this proposal, the Republican members did accept the court ruling “that the evidence presented in the case showed that resources — whether monetary or otherwise — were not adequate to meet the needs of the students.” The minority Republican report also identified best practices for education that we fully support but that cannot be put in place without new funding. And the minority report rightly said that it is up to the General Assembly to meet those needs.

So, the next steps are for the Governor to present, and the General Assembly to accept, a budget proposal that will implement the first year of this bold program.

We believe that a majority of Senate and House members will eventually do that because their districts’ families, as well as the areas’ businesses, recognize that adequately and equitably funding education is critical to providing opportunity for their kids and a strong economy for their communities.

We are grateful that Governor Shapiro and members of the General Assembly are leading the way to a better future for our kids and our Commonwealth. As advocates for education, we will spend the upcoming months collaborating with them to amplify the voices of Pennsylvania’s kids, families, and businesses in support of implementing the plan that was proposed yesterday. We believe that those voices will ultimately carry the day and that this year we will put in place a path to full and fair funding of K-12 education in PA. We encourage everyone listening today to join us.

January 12, 2024

Press Release: Taxes in Pennsylvania Are Upside-Down

By Press Release

FOR IMMEDIATE RELEASE: January 10, 2024

Contact: Kirstin Snow at Penn Policy Center snow@pennpolicy.org or Jon Whiten at ITEP jon@itep.org.

RELEASE: Pennsylvania’s Tax System Exacerbates Inequality, In-Depth National Study Finds

State Has the 4th-most Regressive Tax Code in the Nation

Harrisburg, PA — Pennsylvania’s tax system is upside-down, with the wealthy paying a far lower share of their income to taxes than low- and middle-income families. That’s according to the latest edition of the Institute on Taxation and Economic Policy’s Who Pays?, the only distributional analysis of tax systems in all 50 states and the District of Columbia.

In sharing the data, Marc Stier said, “The new report from our national partner, the Institute on Taxation and Economic Policy, shows that Pennsylvania has one of the most upside-down state and local tax systems in the country. We should be ashamed to live in a state with the highest rate of taxation for the bottom 20% of families arranged by income and in which those families’ taxes are more than twice the rate of the top 1%’s.”

In his response to the data, Senator Art Haywood (D-Montgomery and Philadelphia) said, “It is clear that the tax dollars of everyday Pennsylvanians are being vacuumed up to the richest. In the last decade, seven billion dollars have been vacuumed up to the richest in Pennsylvanians. We can change our taxation system so that everyday, hard-working people are no longer left behind.”

Also addressing the new report, Representative Chris Rabb (D-Philadelphia) said, “In a state where the bottom 60% percent of income earners on average pay at or nearly double the tax rate of what the richest Pennsylvanians pay, it’s time ALL residents pay their fair share.

“The Fair Share Tax Plan bill — HB 1773 — will correct the long-standing injustice of this #taxpolicy by increasing the tax on passive income from things like net profits, dividends, net gains derived from rents, royalties, patents and copyrights and net gains derived through estates and trust.

“As a result, HB 1773 will generate an additional $6 billion in revenues all while lowering or maintaining the tax rate for the vast majority of Pennsylvanians.”

The report’s key findings for Pennsylvania (See presentation from the event here.):

The lowest-income 20 percent of taxpayers face a state and local tax rate that is 152 percent higher than the top 1 percent of households. The average effective state and local tax rate is 15.1 percent for the lowest-income 20 percent of individuals and families, 11.4 percent for the middle 20 percent, and 6 percent for the top 1 percent.
Pennsylvania has the 4th-most regressive tax system in the nation.
Pennsylvania is one of 41 states that tax the top 1 percent less than every other income group, and it is one of 34 states that taxes its poorest residents at a higher rate than any other group.

Nationally, tax systems in 44 states exacerbate inequality by making incomes more unequal after collecting state and local taxes, while systems in six states plus D.C. reduce inequality, the report finds. On average, across the country, the lowest-income 20 percent of taxpayers face a state and local tax rate nearly 60 percent higher than the top 1 percent of households. The nationwide average effective state and local tax rate is 11.3 percent for the lowest-income 20 percent of individuals and families, 10.5 percent for the middle 20 percent, and 7.2 percent for the top 1 percent.

“When you ask people what they think a fair tax code looks like, almost nobody says we should have the richest pay the least. And yet when we look around the country, the vast majority of states have tax systems that do just that,” says Carl Davis, ITEP’s research director. “There’s an alarming gap here between what the public wants and what state lawmakers have delivered.”

PA-specific polling data on taxing corporations and the ultra-wealthy can be found here.

Recent policy changes have exacerbated or lessened regressivity in state tax systems, depending on the choices made by lawmakers.

About the report:

Who Pays? is the only distributional analysis of tax systems in all 50 states and the District of Columbia. The comprehensive 7th edition of the report assesses the progressivity and regressivity of state tax systems by measuring effective state and local tax rates paid by all income groups. No two state tax systems are the same; this report provides detailed analyses of the features of every state tax code. It includes state-by-state profiles that provide baseline data to help lawmakers and the public understand how current tax policies affect taxpayers at all income levels. More than 99 percent of all state and local taxes, measured by their revenue contribution, are included in the analysis.

About ITEP:

ITEP is a non-profit, non-partisan tax policy organization. We conduct rigorous analyses of tax and economic proposals and provide data-driven recommendations on how to shape equitable and sustainable tax systems. ITEP’s expertise and data uniquely enhance federal, state, and local policy debates by revealing how taxes affect people at various levels of income and wealth, and people of different races and ethnicities.

About Pennsylvania Policy Center:

Through its research and policy development, the Pennsylvania Policy Center creates the tools political officials, opinion leaders, grassroots organizations, and the people of Pennsylvania need to expand our vibrant democracy, secure our freedom, and seek economic justice in Pennsylvania. Our work draws on a close connection to Pennsylvanians in every corner of the state, who tell us the problems they face, and robust and credible public policy research and analysis that identifies the sources of these problems and proposes solutions. These tools enable Pennsylvanians in and out of government to make their voices heard and create public policies that reflect their ideals and serve their interests.

Pennsylvania Policy Center is the state affiliate of the Center for Budget and Policy Priorities.

January 10, 2024

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The event featured the following speakers:

A Pennsylvania Budget To Celebrate

Overview

A Pennsylvania Budget to Celebrate

Overview

The Budget Overall

Education

Early Childhood Education

Higher Education

Building a Strong Economy

Minimum Wage

Public Transportation

Child Care

Housing

Revenues: Short-Term

Revenues: Long-Term

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