The challenger in the race for Pennsylvania’s Governor would impose a variety of new taxes on citizens and businesses.

A famous Philadel-phian once said that nothing is certain except death and taxes. He never mentioned being taxed to death.

There’s a simple truth that economists have expounded for years: If you tax something, you get less of it. And what do we tax at all levels of government? Hard work, productivity, capital formation, savings, investment and … well, you get the picture.

Tax policy is now taking center stage in the race for governor. And it should. How well the winner of November’s election guides the state’s economy and how its citizens are taxed will determine whether we continue on the path to prosperity, or are relegated to back-bench status among the world’s economies.

Back to basics

As the race for governor winds down, voters are beginning to focus on the specific things  candidates would do for the state’s economy and taxpayers over the next four years.

They are looking beyond the fluffy “intro” ads that feature the kind of car a candidate drives or the names of his children. They’re asking increasingly penetrating questions about Tom Wolf’s open admission that he plans to raise taxes. They’re not getting many answers.

What we know is that Tom Wolf wants to raise taxes – on whom and by how much are essential details he doesn’t feel obligated to share. As the taxman for Ed Rendell, Wolf couldn’t look at a tax without wanting to increase it. In addition to wanting to saddle working Pennsylvanians with a higher sales tax, he fought for new taxes on electricity and garbage and even a heating tax that would have hit consumers especially hard during our recent harsh winters.

Now he is telling us that he’ll raise the personal income tax if he’s elected. That’s in addition to a second “extraction tax” on natural gas development. But he won’t share any of the specifics of his plan.

During the first debate of the campaign, held during the PA Chamber of Business and Industry’s annual dinner, the moderator pressed Wolf for the details of his tax hike plan. Wolf demurred, saying that he “didn’t have the data” to fully formulate his tax increase proposal. It was a novel approach for the former secretary of revenue. “The data” is publically available, something Wolf surely knows.

Defining progress

Wolf has said that he would like to impose a “progressive” income tax on earners. There’s a problem, though. The Pennsylvania Constitution prohibits it. So Wolf has come up with an end run around the constitutional proscription: a “universal exemption,” under which people making more than the exemption would pay significantly more, while those earning less would pay nothing.

He claims this is fair because it requires “rich people,” like himself, to pay more. Aside from some major philosophical problems with such an approach, there’s a big problem in how he defines “rich.” His plan appears to make a household with two $30,000-to-$35,000-per-year wage earners qualify as “rich,” thus requiring them to pay substantially more in income tax. Ask a family of four or five with a combined income of $60,000 or $70,000 if they think they’re “rich.”

On the other hand, Tom Wolf is rich – super rich. Nobody begrudges him that. But his “I should pay more,” rhetoric doesn’t match up. It raises the question: So why doesn’t he?

Unlike Governor Corbett, who has released ten years worth of personal income tax returns for public inspection, Wolf has not. However, even the limited information he has made available reveals that he pays miniscule federal income taxes. Tom Wolf is paying a far smaller percentage than the workers on his factory floor. So much for “rich people should pay more.”

Losing focus

Mr. Wolf has pontificated about the “need” for an additional tax on natural gas development. He claims a billion dollars could be raised from a “severance tax” on top of the severance taxes (“impact fees”), corporate net income taxes, capital stock and franchise taxes, and other state and local taxes the industry already shells out.

A special tax applied to only one industry raises myriad public policy questions. Some have, tongue-in-cheek, asked about a special tax on cabinetmaking, the Wolf family business. More serious folks have raised real concerns about the possibility of additional special taxes on other natural resources like coal, timber, sand and gravel, or even water, under a Wolf Administration.

The simple truth that if you tax something, you get less of it, should worry every Pennsylvanian when Tom Wolf starts talking about raising taxes. Driving businesses, both large and small – and the jobs they create and sustain – out of our state will have devastating effects. It will block the road to prosperity and leave working families in a lurch.

Wolf espouses the view that politicians and bureaucrats know better how to spend hard working citizens’ money. But most families believe that when their budget gets bigger and they decide for themselves how best to spend their hard-earned dollars, we’re all better off.

I haven’t met a single voter who’s said, “My life would be better if my taxes were higher.”


Posted on October 17, 2014 by Region's Business in Public Policy