Taxing decisions
Raising cigarette taxes is easy. Raising personal income taxes by nearly 35 percent will be a tough sell. Gov. Ed Rendell tried to sell the proposed hike in state personal income tax from 2.8 percent to 3.75 percent with this caveat: 58 percent of the $2.2 billion raised will go directly to reduce property taxes. It’s a tradeoff, and everyone will need to watch as things shake out and calculate what this will mean for your own personal finances. What it will mean for Pennsylvania, the governor says, is billions more for education.
Here is what he proposes: Each school district will receive 2.5 percent more than last year for basic, special and vocational education; $1.5 billion will be divided among the 501 school districts.
For each dollar received, school boards must reduce property taxes by a like amount. Another $1 billion will go toward starting preschool and full-day kindergarten programs under the theory that the sooner kids begin learning the better they will perform both academically and socially.
There were few surprises in the governor’s plan. Most had expected that an income tax hike was needed, and that he would push for legalizing slot machines at the state’s eight racetracks. At least with income taxes, people know what to expect. They understand how much this will cost and whether the added tax burden is worth it.
But some of the other revenue generators proposed by the governor hit folks through the back door. Just as the landfill-tipping fee increase last year flew under the radar until people were hit with higher garbage bills, so are the beer tax and telephone tax that the governor proposes.
It might in the end make sense to impose a gross receipt tax on wireless phones, similar to the one already assessed on landline services. And it might not be a burden to raise the beer tax from 8 cents to 25 cents a gallon. But consumers need to understand that they, not someone else, are shouldering these taxes. The cell phone bill will be a bit higher, a bottle of beer a few pennies more.
The same goes for the governors’ plan to add yet another fee, this time $50, to drivers ticketed with moving violations.
It’s easy for the government to slip these kinds of taxes through without too much fuss. By the time people discover the cost, it’s far too late.
It is much more difficult to tell folks that they must part with nearly an additional percent of their wages to fund government. The questions that each of us needs to ask are these: Is it really needed and will it be spent wisely.