Pennsylvania income taxes and tonight's debate

HOW ABOUT some tax talk?

Wait, wait, don't leave.

This is important, or could be. It's a big part of the governor's race and likely to be a focus of the final debate in Pittsburgh tonight.

Republican Gov. Corbett says he should be re-elected for keeping taxes low and because Democrat Tom Wolf will raise taxes - without saying how much.

Wolf argues Corbett's management and tax policy hurt education, job creation and state fiscal ratings. Wolf says he just wants to make taxes fairer.

So he proposes a progressive replacement of our 3.07 percent flat-rate income tax to give "the middle class" a break.

This raises questions.

Is it constitutional? Is progressive better than flat? And what's "the middle class"?

What Wolf offers with scant detail is exempting some (unclear how much) income from taxes while taxing income above that level at a new rate (unclear what).

His campaign website calls for a "progressive income tax" explained in three sentences promising "workers" a tax cut.

The state Constitution has a uniformity clause, Article VIII, Section 1, that says, "All taxes shall be uniform, upon the same class of subjects."

Wolf contends his plan keeps a uniform rate (say 5 percent) and so meets the mandate.

But University of Delaware professor and tax expert Sheldon Pollack says Wolf's plan "is not uniform" because currently every earned dollar is taxed at 3.07 percent and under Wolf's exemptions not every dollar would be.

So if Wolf's elected and gets his plan past lawmakers, the courts will likely sort it out.

Meanwhile, progressive vs. flat creates arguments.

Most states have progressive taxes, different rates for different incomes. Just eight, including us, have flat rates. Seven others - all southern, western or Alaska - have no income tax. And two, New Hampshire and Tennessee, tax just dividend and interest income.

A progressive tax is fairer to lower- and middle-income earners since "it assures them more disposable income," says Elizabeth McNichol, senior fellow at the national Center on Budget and Policy Priorities.

And, says wealthy candidate Wolf, it's "fairer" if the wealthy pay more.

But Heritage Foundation senior fellow David Burton argues a progressive tax is "redistribution of wealth" while a flat tax makes sure "your money is yours."

Scott Drenkard, of the Tax Foundation, a nonpartisan D.C.-based research organization, also likes our flat tax.

"What could be simpler?" he asks. "It's broad-based with a low rate [lowest among flat-rate states]. That's the bread and butter of good tax policy."

Is either tax better for a state's economy?

Some experts say there's little difference in the overall economies between states based solely on the kind of income tax imposed.

But Delaware's Pollack says a progressive tax raises more money, "which doesn't mean it's better." And Heritage's Burton says population "outflow from California and high-tax northern states to western and southern states is to no small degree due to economic opportunity in lower-tax states."

Now to "the middle class."

Wolf defines it from $70,000 to $90,000 on individual returns. His campaign says for a married couple the upper end of middle class is $140,000 to $180,000 - something I've not heard Wolf explain.

Most economists suggest there's no ideal "middle class" definition. But there is a model from former U.S. Labor Secretary Robert Reich. And, yes, he served under President Bill Clinton which, for some, might raise eyebrows. But he's a Rhodes Scholar, a Yale lawyer and a widely respected economist.

His "middle class" incomes are those 50 percent above and 50 percent below the median: in Pennsylvania that's $26,134 to $78,400 for individuals and $52,268 to $156,800 for marrieds.

Again, the question has no firm answer.

Like so much having to do with economics. Like Wolf when asked about his plan.

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