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By Chris Lilienthal, Third and State
Working families in Pennsylvania pay a far higher share of their income in state and local taxes than the state’s wealthiest earners, according to a new study by the Institute on Taxation and Economic Policy (ITEP).
Pennsylvania’s tax system scored so poorly that it made the list of the “Terrible 10” most regressive tax states in the nation.
The Pennsylvania Budget and Policy Center (PBPC) co-released the report, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, with ITEP. PBPC Director Sharon Ward made the point in a press release that “No one would deliberately design a tax system where low-income working families pay the greatest share of their income in taxes, but that is exactly the type of upside-down tax system we have in Pennsylvania.”
Middle-income families in Pennsylvania pay more than double the share of their income in taxes than the very wealthiest Pennsylvanians, while low-income families pay nearly three times as much as top earners, the report found. Get more details on the report, including a Pennsylvania fact sheet, here.
Families who qualify for state personal income tax forgiveness still pay large shares of their earnings in sales, local income and property taxes, the report found. At the same time, wealthy taxpayers benefit greatly from tax laws that allow them to write off property and income taxes from their federal taxes. This is, at best, a modest benefit for middle-class families and no benefit to very low-income earners.
Pennsylvania’s flat income tax contributes to its regressive tax ranking. Without a graduated tax rate that rise on more affluent earners, the state’s income tax does little to offset more regressive sales and property taxes.
That’s why Pennsylvania should amend the state Constitution to enact a graduated personal income tax. Even without a constitutional change, the state could set a higher income tax rate on investment income, which goes primarily to wealthy Pennsylvanians, without raising the rate on wage earners.
8 Comments
Damn. That makes your neighbor to the west look a little better. Sounds like Philadelphia and Pittsburgh should set aside their differences and march on Harrisburg.
Good post and a great link. Thanks and rec’d.
A tax analysis isn’t complete unless the amounts are compared. The bottom 20% and the top 20% pay X% and Y% of the taxes collected. What are X and Y, for example? In other words, what is sacred about rates to the exclusion of other considerations, like amounts?
Well, former Gov. Ed Rendell has something to talk about with his Neo-Con friends over the austerity plans both want to put in place. Maybe they could call The Prez and make it a 3way, conversation wise, that is. They don’t call this state Pennsyltucky for being smart, evidently. Do they really have the Liberty Bell in a hoser joint like this?
So how much “economic value” did P.A. residents blow out their tailpipes, this year? Seems to me austerity is code for “protect the oil whores?” Where wasteful transportation / business models suck life and liberty from the governed and this republic, concerning potential energy used for transportation, just as a slave was exploited for his potential energy. A servile relationship akin to substance abuse, where the negative consequences are minimized and deliberately hidden from public view, to protect the monopoly on energy enjoyed by the few……
Nice to see the cost of gas rising again and the “suck pump,” extracting more “life force” from the republic, in a consumer driven economy? Servitude is bought just like these tax laws which screw families while in reality ignoring the biggest tax on life, next to overpriced underwater housing, transportation.
It is called protect the energy monopoly once again, as a select few sought to protect a monopoly on energy, once predicated on skin color, at prior time in our nation’s history. History it seems we forgot?
Sounds like a Tea Party is about to break out around here.
The current tempests in the “tea pot” are sadly misguided, referencing an historical event, more symbolic in nature of the colonist’s contempt for an increased tax on a commodity tea, deemed necessary and provided by monopoly.
The monopoly on labor, humans ended at great cost to our society. Question is to what extent will the current energy monopolizers, fuck America and the world to protect an “entitlement” to monopolies in energy?
Considering Wall Street’s Mr Magoo’s like intoxicated driving skills which seem to have driven the country into a bridge abutment at 90 mph, I wonder how much gold can be picked from the teeth dislodged from the inevitable collision, orchestrated by negligent behavior, by the energy purveyors after just sucking US dry, a few years back?
The problem with your proposal is the increasing tax rates on high earners it won’t add one red cent to the incomes of those at the bottom. OTOH, if you make the tax code more progressive by lowering the tax rate for those at the bottom, that actually puts more money into those low income bockets.
At $3 a gallon it’s the most velvet of chains.