Gov. Wolf Proposes Income Tax Increase

Gov. Tom Wolf on Tuesday proposed increasing the state income tax as part of a $33 billion spending plan for 2016-2017. His budget proposal, which also includes increased education funding and a hike in the minimum wage, was offered during a joint session of the General Assembly.

Under Wolf’s proposal, the state personal income tax rate would increase 11 percent from 3.07 to 3.4 percent, effective Jan. 1.

The increased income tax is just one element included in $2.7 billion in new or increased taxes proposed by the governor. Other tax increases would be imposed on cigarettes, movie tickets, basic cable and more.

The additional funding is needed to “fix Pennsylvania’s structural budget deficit and invest in schools,” the Governor said. Wolf’s plan proposes significant increases in basic education and higher education.

His spending plan also seeks to promote a “jobs that pay” initiative by increasing the minimum wage by nearly $3 an hour.

The alternative to higher taxes and increased education funding would be dire, according to Wolf. If the increased funding isn’t in place, the state will continue down a path of “greater devastation” with lawmakers in a perpetual budget impasse and potential cuts to education and social services required, he said.

“There are two paths we can take: we can fix our deficit and invest in education to move Pennsylvania forward or we can continue to embrace the failed status quo and cut $1 billion from education funding, cut hundreds of millions of dollars to essential social services and continue to stifle the commonwealth’s economic growth,” Wolf said.

The proposal comes as lawmakers continue to battle over the current year’s funding. A stalemate over the 2015-2016 budget resulted in a partial veto of a Republican-backed $30.3 billion spending plan.

Not surprisingly, Republicans expressed opposition to Wolf’s newest proposal.

One lawmaker called it a ”fantasy budget.”

“It is wildly irresponsible that Gov. Wolf is now trying to lay the whole foundation for his new budget on tax hikes he wanted but never got last year. Either he’s disconnected from reality or he’s choosing to play pretend. This kind of fantasy budget proposal doesn’t help anyone and only creates more real-world chaos for taxpayers and vulnerable citizens,” Rep. Stephen Bloom (R-Cumberland) said.

In addition to the increase in income tax, highlights in Wolf’s budget proposal include:

• Increases to education funding, including: a $200 million (3.3 percent) increase in the Basic Education Subsidy; a $50 million (4.6 percent) increase in the Special Education Subsidy; and a $60 million (30.5 percent) increase in high­-quality early childhood education.
• Increases to high education funding, including $22.1 million increase for community colleges, $42.3 million increase for universities that are part of the State System of Higher Education and $59.7 million increase for state-related universities, including Penn State University, the University of Pittsburgh,Temple University and Lincoln University.
• An increase in the state minimum wage from $7.25 to $10.15
• A 6.5 percent tax on Marcellus shale natural gas drillers
• Expansion of the 6 percent sales tax to include basic cable and movie theater tickets
• An additional $1 tax on a pack of cigarettes

Click here to view more information on Wolf’s budget plan.