UPDATED: Ground control to Major Tom: Your tax plan's weird, there's something wrong
Gov. Wolf was off to a good start, but his tax plan may not make any sense.
UPDATE: The plan is out -- you can read some of the details here. I watched Wolf's speech and heard from a few smart people since I posted this last night. The bottom line -- I like the plan a little more than when I was going on the initial advance leaks, but I still have concern about raising the sales tax. It should have been noted -- as several commenters pointed out -- that court cases have pretty much put the kibosh on a progressive income tax, and other tax fairness ideas, barring a constitutional amendment, which is a time-consuming and virtually impossible process. The notion that Wolf's plan would lower taxes for Pennsylvanians making more than $100,000 and raise them for those earning more sounds like the right direction, but we'd like more info, please. Also, there's not a snowball's chance in hell that Republicans pass this, right?.
ORIGINAL POST: Just six weeks into his administration, Gov. Tom Wolf is determined to shatter every stereotype about bald, bearded guys -- to which I can only say it's about damn time. It seemed like a long time ago that Wolf introduced himself to Pennsylvania as a mild-mannered -- arguably milquetoast -- dude whose Jeep was either a way to get around Mt. Wolf or the manifestation of a mid-life crisis.
But since taking the oath in late January, Wolf has been a governor on Viagra -- and the once-bored spouse that is Pennsylvania can't decide whether to share in his enthusiasm or hide under the covers. He's put a temporary kibosh on the death penalty and on expanding fracking in state parks and forests, worked to undo some 11th-hour Tom Corbett appointments, and -- in the latest, most local shocker -- ousted Corbett's pick Bill Green as head of Philadelphia's School Reform Commission.
Whoa. And all that ahead of Tuesday's big budget address, when he unveils his real plan for the future of the state. Not surprisingly, what you think of Tom Wolf, man of action, pretty much depends on where you fall on the political spectrum. If you're a Democrat, the new governor is the greatest thing since sliced hoagie rolls. If you're a Republican, the governor is a dictator, basically. I look at these six weeks and see the good, the bad, and the ugly.
The good is most of what he's done so far. The bottom line, quite simply, is that elections have consequences, people. In November 2014, Pennsylvania voters bucked a GOP landslide elsewhere in the nation, and they did something that's never happened since the commonwealth raised the limit from one to two terms in the 1960s -- they voted out an incumbent governor. In other words, they wanted radical change -- so it's odd that people are so shocked when that change arrives. The moves on fracking, the death penalty, and Philadelphia schools are bold and perhaps pushing the outer limits of his executive authority, but he's also doing exactly what he promised on the campaign trail. Our surprise says more about our low expectations for government, frankly, than it does about Wolf.
But some of Wolf's frenetic first days in office have indeed been badly executed. I do think Wolf is truly sincere about pursuing ethics reform -- he's already banned gifts in the executive branch, a response in part to this story I wrote in 2013 -- and transparency. But canning the Open Records chief named in the final weeks of the Corbett administration was a clumsy and counterproductive way to pursue those goals. It would have been a lot smarter to wait and see how the Republican that Corbett picked, Erik Arneson, actually performed -- and then make a decision based on whether he shared Wolf's ideas on transparency.
Which brings us to the potentially ugly: The rumors about the sweeping tax overhaul that the new governor will announce tomorrow. Most of us can agree that whatever Pennsylvania's been doing, fiscally, these last years simply isn't working. We've seen chronic budget gaps, grossly unfair distribution of education dollars, a mounting pension problem, etc., etc. The Inquirer's recent leaked peek at the broad outlines of Wolf's budget suggest he wants to solve the budget gap...by raising more money. OK, but the devil is in the details, and some of the leaked details are already troubling.
The reports say that Wolf wants to cut corporate tax rates but reduce loopholes, lower the property tax burden but increase both the state income tax and sales taxes. That would be a radical change in the way Pennsylvania does business. But it also feels like a betrayal to Wolf's supposed progressive ideals. The corporate tax plan may be sound -- most experts agree the real problem is not the rate but the loopholes that allows many firms not to pay them, so a more equitable system would be an upgrade.
But the leaked details on the income tax and sales tax proposals make no sense. Most experts will tell you that one of the biggest problems in Pennsylvania is income inequality -- and our tax policy contributes to that. (The Institute on Taxation and Economic Policy ranks Pennsylvania as the 8th most regressive state in the nation.) Our current flat income tax -- a conservative wet dream -- means that the CEO of Comcast pays state income taxes as the same rate as the janitor that cleans his office. The massive change that's needed is a move to a progressive tax, so that the wealthy pay a bigger share. And higher sales taxes are a non-starter -- especially if the taxes are expanded to more family necessities such as clothing, as some reports have suggested. The sales tax is the most regressive tax in the fiscal toolbox -- falling heaviest on the poor who spend a greater share of their income on basic goods.
If's fun to have a governor on Viagra, but fixing Pennsylvania's complicated tax problems don't need increased blood flow so much as better focus, For this, it might require a governor on Adderall.