PolicyBlog has moved!

Thank you for visiting, PolicyBlog has a new address.

Our new location is http://www.commonwealthfoundation.org/policyblog

Please adjust your bookmarks. Archived posts will remain here for now.

Thanks




Tuesday, January 31, 2006

#254 on the Liberty Index lives up (down?) to his ranking

Philly Democratic Senator Vince Fumo (who scored the worst on our Liberty Index) has proposed a graduated income tax to further punish the producers in Pennsylvania. Nevermind that the "rich" currently pay more under PA's flat tax rate ($30K = $921 in income taxes; $250K = $7,675 in income taxes), Fumo wants even more wealth redistribution.


AP: Latest property tax idea would raise taxes on rich.

By MARC LEVYAssociated Press Writer

HARRISBURG, Pa. (AP, Jan. 30) - The wealthiest 1.5 percent of Pennsylvania households would pay more state income tax under a proposal made Monday by a Democratic state senator to cut property taxes in most of the state, and wage taxes in Philadelphia.

The proposal to shift $750 million in school funding onto the state income tax is the latest of many as the Legislature searches for common ground on the hot-button issue of how to slow the rising cost of property taxes before this year's elections.

Sen. Vincent Fumo, D-Philadelphia, said his fellow Senate Democrats support the proposal, but it had not been discussed with Gov. Ed Rendell or Republicans, and a senior GOP Senate aide raised doubts over whether such a tax code change could be made this year.

While some lawmakers have advocated raising the state sales tax to offset property tax cuts, Fumo said raising income taxes on the wealthiest makes more sense because it does not hurt renters, the fixed-income elderly and people with the lowest incomes.

"We should raise (school funding) from people who can afford to pay it," Fumo said.

Creating a graduated income tax takes a constitutional amendment, Fumo said. The quickest way to amend the constitution is to secure a two-thirds vote in both houses of the General Assembly before putting the measure to voters, ideally on the May 16 primary ballot, Fumo said.

However, that process is reserved for emergencies, and Erik Arneson, the chief of staff to the Senate's Republican leader, David J. Brightbill, disputed whether the issue meets that definition. Otherwise, a constitutional amendment is a multiyear process that requires majority votes in two successive two-year legislative sessions and approval in a statewide referendum.

Under Fumo's proposal, the state income tax rate of 3.07 percent would rise to 4.57 percent on any income earned above $250,000, but not more than $400,000. The tax rate on any income earned above $400,000 would rise to 6.07 percent.

The proposed tax increase would raise $750 million to offset property tax cuts. A subsequent tax write-off on state income taxes would mean the affected taxpayers would receive $262 million of it back from the federal government, Fumo said.

When combined with $1 billion in anticipated revenue to be generated by slot machines for property tax cuts, the owner of a home at the average assessment would receive about $580, or about one-third of the average property tax bill.


-30-

No comments: