PA Senate Approves $3B Tax Cut Despite Objections By Democrats

HARRISBURG, PA — The Pennsylvania Senate on Tuesday passed legislation that could cut taxes by approximately $3 billion, a counterproposal to Gov. Josh Shapiro's $48.3 billion spending plan unveiled in February.

The legislation that cuts taxes on income and electric service in the state passed the Republican-controlled Senate in a 36-14 vote. While some Democrats opposed the bill, eight joined all Republicans in supporting it.

The vote came less than two months before the new fiscal year starts on July 1.

According to Senate Republicans, the tax cut would be the largest in the state's history and would save taxpayers more than $13 billion over the next five years.

"The Senate Republican Caucus’s top priority has been and continues to be strengthening Pennsylvania by positioning and empowering Pennsylvanians, their families and their businesses to succeed," Senate President Pro Tempore Kim Ward said in a statement. "Today, we take the next step in our relief efforts by directly returning money to Pennsylvania families by taking steps to reduce the personal income tax by nearly 10 percent."

Under the counterproposal, the personal income tax rate would drop from 3.07 percent to 2.8 percent. It would also eliminate the 4.4 percent gross receipts tax on the profits of private electric utilities, a tax that is passed on to commercial and residential electric customers.

The Republican plan is a direct counterproposal to Shapiro's budget, which calls for significant increases in spending funneled mainly to education and economic development.

Shapiro's plan also leans heavily on Pennsylvania’s $14 billion in cash reserves. According to an Associated Press report, Shapiro's proposal would shrink the state’s cash reserve by $3 billion — the same amount the Republican counterproposal seeks to return to taxpayers.

Shapiro's proposal has the support of top Democratic lawmakers, but it has yet to see a vote in either the House or the Senate.

"Since my first day in office, I’ve been focused on getting stuff done – and this budget will continue to create opportunity for every Pennsylvanian with historic investments in economic development, education, healthier and safer communities," Shapiro said when unveiling the budget in February.

In a statement sent to the Associated Press, Shapiro didn’t say whether he supports the Republican counterproposal, but he would welcome a conversation on what to do with the state’s surplus.

“With this proposal, Senate Republican Leaders are coming to the table and acknowledging that we must invest in Pennsylvania’s future,” his office said.

The counterproposal now heads to the House for consideration.