New taxes, new spending, new government mandates. That’s the budget address Governor Tom Wolf presented to Pennsylvanians on Feb. 3. Indifferent to the reality of struggling Pennsylvanians, Gov. Wolf proposed an increase to the state Personal Income Tax by nearly 50 percent, a job-killing minimum wage hike, additional taxes on Pennsylvania energy production, and heightened complexity to our business tax system, amongst other foolish ideas.
He offered no reprieve to his imperious lockdown agenda, which has needlessly destroyed jobs and businesses while failing to control the spread of COVID-19. Pennsylvania’s economic lockdown measures were swifter, broader, and lasted longer than almost any other state. Supply chains were
disrupted, critical industries that were changing manufacturing lines to make much needed personal protective equipment were forced to close. And all of this was enforced with little to no notice from state government officials.
Gov. Wolf was amongst the first in the nation to abandon the “flatten the curve” goal. Instead, on May 20, 2020, he suddenly moved the goal post to vaccination, saying, “… that’s what it’s going to take to really get our economy back to normal, and I really think that can’t happen fully, 100%, until we have a vaccine that is foolproof.”
Yet, despite that self-created goal, there were 3,267 words in his budget address and not one of them were “vaccine” or “vaccination.” If the intent behind his 2021 Budget Proposal is to put Pennsylvania back on track economically, why avoid the very thing that he said we rely upon the most? This is especially puzzling when you consider that Pennsylvania continually ranks at the very bottom of states in terms of vaccination deployment.
There were 3,267 words in his budget address and not one of them were “vaccine” or “vaccination.” If the intent behind his 2021 Budget Proposal is to put Pennsylvania back on track economically, why avoid the very thing that he said we rely upon the most?
As Pennsylvania House Majority Leader, Kerry Benninghoff (R-171), said in his response to the Governor’s Budget address, “The governor and his administration should have no other top priority than getting Pennsylvanians vaccinated. Getting vaccines into the arms of Pennsylvanians is the most significant key to getting Pennsylvania back to normal and beginning to solve many of the problems the governor outlined today [in his budget address].”
But that’s not the budget address we got.
Instead, he insisted that the state’s Personal Income Tax (PIT) should jump from 3.07 percent to 4.49 percent with an expansion of constitutionally questionable income exemptions. The administration claims that two-thirds would pay less or the same amount, while the top one-third would pay more. But according to research published by the Commonwealth Foundation, “Wolf’s proposal is a net $2.96 billion tax increase, representing $232 per resident (or $927 per family of four).”
But leaving aside the expense of the idea to families, his tax proposal is constitutionality questionable. Pennsylvania’s tax uniformity clause prohibits the bracketing or tiering of tax rates. The way the Governor plans to skirt this constitutional clause is to grossly increase the poverty threshold so that anyone under the newly established “poverty” line would receive a tax rebate from the state. Lawmakers are skeptical this proposed plan would survive a court challenge.
Pennsylvania’s small businesses would suffer as well: “Most small businesses (over 80%)—sole owners, partnerships, LLCs, and S-Corporations—pay the Personal Income Tax. Approximately 855,000 small business owners paid the Personal Income Tax in 2018,” according to the same Commonwealth Foundation study.
Then there’s the plan to inflate the government-mandated minimum wage to $15 an hour. A recent report from the nonpartisan Congressional Budget Office shows that raising the $15 minimum at the federal level, as proposed by many congressional Democrats and President Joe Biden, would cost 1.4 million jobs. Prices would increase for goods and services that rely on entry-level labor, and layoffs would put an additional strain on unemployment benefits and health care programs. Most importantly, this increase would further delay entry by many young people into the workforce, worsening an already severe skilled workforce crisis.
Furthermore, Governor Wolf’s proposal for an additional tax on Pennsylvania energy production threatens our commonwealth’s business competitiveness and America’s role as a global energy leader. The best way for state government to get more revenue out of the natural gas industry is to help it grow. The industrial dynamism that will be fueled by gas development will be bigger than the drilling activity itself.
Manufacturers rely on natural gas and natural gas liquids as a fuel source and as feed stock. All modern manufacturing that creates the products we use everyday – plastic, rubber, Styrofoam, paints, glazes, coatings, solvents, and adhesives – have their foundational footprint in natural gas or a related natural gas liquid. Natural gas is also the primary feed stock for medical equipment and supplies being used to combat the COVID-19 pandemic as it’s used to produce hypodermic needles, respirators, and personal protective equipment needed by our frontline workers.
Pennsylvania is second only to Texas in total natural gas production, and our contribution to the nation’s energy portfolio has made America number one in the world. Another tax on energy production weakens the geopolitical positioning of the United States and undermines American industrial strength.
Pennsylvanians are in urgent need of a competent pandemic response by state government… Instead, Gov. Wolf has offered up an obscene progressive wish list that disrespects the economic reality of families and businesses trying to make it through the month.
Pennsylvania’s manufacturers will continue to respond to the pandemic in heroic ways, but the failure of the Wolf Administration to listen to anyone outside their closed circle makes our job harder. Pennsylvanians are in urgent need of a competent pandemic response by state government, including an efficient vaccination campaign, protections against lawsuit abuse for entities following CDC protocols, and cooperative executive decision-making that includes the people and their elected representatives. Instead of doing that, Gov. Wolf has offered up an obscene progressive wish list that disrespects the economic reality of families and businesses trying to make it through the month.
As his administration continues to be embarrassed by controversy and a floundering vaccine rollout, Gov. Wolf should focus on getting his own house in order before peddling a big-government agenda masquerading as a pandemic response. What manufacturers want – and what Pennsylvanians need – is a competent executive office that is focused on pandemic response and total harm minimization, including safely reopening Pennsylvania’s economy. Put simply, Governor Wolf’s budget proposal fails to meet that reality.
Carl A. Marrara is the Vice President of Government Affairs at the Pennsylvania Manufacturers’ Association.