Pennsylvania has more millionaire households than Massachusetts or Washington, yet it taxes high-income residents less and has experienced slower growth in its high-net-worth population. While other states have adopted targeted taxes on very high incomes or capital gains to strengthen public investments, Pennsylvania’s flat 3.07% income tax asks the same rate of top earners as it does of working families and relies heavily on wage income for General Fund revenues, leaving substantial wealth comparatively undertaxed.
As the Commonwealth approaches a structural deficit and draws down reserves to balance the budget, this imbalance limits its ability to sustain investments in education, infrastructure, healthcare, and long-term economic growth.