Last week, just as we were putting out our paper on how to raise revenues without raising taxes on working people and the middle class, Governor Wolf announced that he would not call for raising broad-based taxes, particularly the personal income tax and sales tax, in the budget proposal he puts forward in February. And, of course, the Governor's statement echoes what the Republican leaders of the General Assembly have been saying as well.
A friend asked me if I were disappointed by these announcements. I quickly responded, “not at all.” Most of our tax plan is precisely designed NOT to require increases in broad based taxes.
Indeed, the core of our proposal—a new tax on income from wealth—targets families in the top 5%, and even more the top 1%, of incomes. Sixty-seven percent of new revenues would come from top 5%. Middle- and low- income families would pay very little because very little of their income comes from wealth—that is, dividends, profits, capital gains, royalties, and estates.
We do call for an expansion of the sale tax base to some goods and services mostly bought by those with higher incomes, combined with a sales tax rebate for those with low income. And our proposal includes a small increase in the tax on wages and interest, but that is offset by a increase in tax forgiveness for those with low incomes. But that is a minor component of our larger proposal. Raising the tax on income from wealth to 6.5%, which would still leave it below similar rates in other states, would raise $2.5 billion per year, going far to close the deficit next year and leaving us a little extra to invest in schools and human services, and combined with our other tax proposals, enough to also cut broad-based taxes a bit.
So, my response is, when it comes to being against a broad-based tax increase, we are on the same page as Governor Wolf and the House and Senate Republicans as well.