Governor Tom Wolf, in his maiden budget plan, has proposed increased state taxes, approximating $4 billion on natural gas drilling, sales and income. He needs a substantial inflow of money to overhaul public education, which includes raising the budget for schools. Raising state taxes may help him to some extent.
The proposal given by Wolf has three substantial taxes linked together:
Sales tax: The proposal will increase Pennsylvania’s sales tax to 6.6 percent from 6 percent with effect from January 1, 2016. Prescription drugs, clothing and food will be exempted under the tax. Items like gum and candy, which are taxed in other states will be added later on.
Personal income tax: His proposal includes the increase of income tax to 3.7 percent, effective from July 1, 2015. The proposal also increases the tax forgiveness eligibility, where a family consisting of four members with a $36,000 annual income will be exempt from paying income taxes to the state.
Property taxes: A reduction of $3.8 billion was made in the budget proposal on property taxes in the school district. According to Wolf, it will reduce the taxes of homeowners by a median of about 50 percent.
Conflict with Republicans
According to Wolf and his administration officials, the size of the proposed fund is $29.88 billion. Republicans, however, claim a much higher estimated cost. According to them, Wolf’s calculations were not inclusive of payments made to the Public School Employees’ Retirement System. He has also ignored the money gathered from personal income tax, which will be utilized for reduction in property tax for the school districts. Calculations made by the House Republicans from Adams and York, estimate a $33.8 billion expense to the exchequer.
Wolf’s budget solves an approximate $2 billion in structural benefit. It also takes into consideration a compulsory pension increase and also a number of others including Department of Human Services.
According to Wolf, his budget includes a mix of ideas from both the Republican and the Democratic Party. His idea crosses party lines and finds its footing on common sense, value of inclusion and fairness. He added that the budget takes notice of the fact, that the Pennsylvania state will stay in the doldrums until the middle class is rebuilt.
Wolf is of the opinion that, Pennsylvania is presently at the crossroads, suffering from an education crisis. It also holds a bottom ranking in creditworthiness and job growth. It is imperative, he says, that the state should have an ambitious and bold budget.