End Pa. deficit? Tax the rich, experts say

A pair of economic analysts have the answer for staving the cash-gorging hole of Pennsylvania’s deficit that’s on its way to reach $3 billion in the next few years: Tax the rich.

Or, more specifically, have them pay more, as outlined in their “A Fair Share Tax Plan for Pennsylvania” discussed Tuesday.

The report found that those at the lower end of the income spectrum pay a higher percentage in taxes while those at the top pay significantly less. Taxing those at the top 0.03 percent more would create $788 million of additional revenue, the report found. If that rate was 0.8 percent more, $1.2 billion more revenue would be raised.

“We need legislation to raise another $3 billion ... to eliminate the deficit,” said Marc Stier, director of the Pennsylvania Bud- get and Policy Center. Stier and Stephen Herzenberg, executive director of the Keystone Research Center, were authors of the tax plan report.

In order for services to continue at the level they have been in Pennsylvania, $1.7 billion more would be needed, according to the Independent Fiscal Office.

According to the report, if revenue and expenditure streams stayed on a similar course, the state’s deficit would be $3 billion by the 2021-22 season and would increase by $175 million annually each year after that.

One thing the report authors state – it’s not current spending levels that are to blame. In fact, they claim, spending has gone down since 1994.

It’s the revenue side that’s been stagnant, at best.

“The problem is basically not a problem of growing state expenditures,” Stier said. “The problem is not that the state is spending more money. We are spending, actually a little less. So, the problem really is the revenue side.”

The report states Pennsylvania’s tax system taxes those with the lowest income at a rate three times that of those with the highest incomes.

It reported that those in the lowest income bracket have 12 percent of their income dedicated to state and local taxes; the middle class is at 10.3 percent and the top 1 percent pay 4.2 percent of their income.

The report stated, “This is backwards. An equitable tax system is one in which those with the highest incomes pay a higher, rather than lower, percentage of their income in taxes.”

It found that Pennsylvania’s system is unfair because it relies heavily on sales and property taxes that more burden lowerincome groups and that the f lat income tax is not graduated, which would increase the tax rate as a person’s income increased.