Third and State

Governor Tom Corbett is proposing a 30% cut to corporate income taxes in his 2013-14 budget plan, along with additional increases in tax write offs for large companies. When fully implemented, the new tax cuts will drain more than $800 million each year from the state budget. The Governor's plan would come on the heels of more than 10 years of business tax reductions that cost almost $3 billion in 2013, one-third of what the commonwealth will spend on Pre-K-12 education.

Over the past decade, Pennsylvania has enacted numerous corporate tax cuts, and the costs have skyrocketed, competing with state funding for schools, the state’s colleges and universities, early childhood education, and human services.

Laws to expand tax credit programs, change the way corporate taxes are assessed, reduce tax liabilities for merging mega banks, and eliminate the capital stock and franchise tax have drained a growing amount from the state treasury. The costs have more than tripled since 2003-04 from $850 million to just under $3.2 billion per year, as the Pennsylvania Budget and Policy Center documented in a new policy brief.

Pennsylvania General Fund revenue collections fell slightly short of estimate in January, with sales tax coming in substantially off the mark. Revenues remain above projections for the 2012-13 fiscal year — now exceeding targets by $153 million, or 1.1%.

Federal health care reform is moving forward thanks to the U.S. Supreme Court’s ruling last year — and it is a great deal for Pennsylvania. Unless the state decides to “opt out,” Medicaid coverage will be expanded to include many Pennsylvanians who are uninsured.

One group that will benefit immediately are parents with incomes up to 133% of the federal poverty level ($25,390 for a family of three). The benefits don’t end there: others who don’t receive health coverage through their work will be able to buy insurance on a competitive health marketplace or exchange — making coverage more affordable.

However, if Governor Corbett prevents the Medicaid expansion, it will create a coverage gap for families between 46% and 100% of poverty, as the chart below shows (click on it for a larger view).

Those families between 46% and 100% of poverty earn too much to qualify for Medicaid (for a family of three, this means earning over $8,781 but less than the federal poverty line of $19,090). These families won’t receive Medicaid coverage, and they won’t receive subsidies to buy health coverage.

We all benefit when more people have health coverage. Let’s make the right decision in Pennsylvania and expand Medicaid coverage.