Report: Wolf's tax changes will hit all, wealthiest most

HARRISBURG - Gov. Wolf's proposed tax changes would result in at least a small overall tax increase for Pennsylvanians in all income ranges, but the cost would fall much more heavily on higher-income residents, says the Independent Fiscal Office.

Residents with incomes of more than $100,000 would bear nearly two-thirds of the increased tax burden, through tax bills and indirect costs like price increases, and those with incomes below $50,000 would pay approximately one-tenth of the increased cost, according to a report released Thursday by the office, a non-partisan agency similar to the Congressional Budget Office.

The office predicted a small net increase for residents with incomes below $25,000 despite significant property-tax and rent relief because of increases in tobacco and sales taxes and smaller increases in personal income tax, and because of the proposed severance tax and utility prices.

Wolf has called for a broad package of changes: increasing the sales tax rate from 6 percent to 6.6 percent while expanding the base of products and services taxed; increasing the personal income tax rate to 3.7 percent from 3.07 percent; dramatically increasing state-funded relief from school district property taxes; cutting the corporate net income tax rate; increasing the cigarette tax; and imposing a tax on the extraction of natural gas.

The changes would increase net state and local tax revenue by $5.2 billion by the fiscal year that begins in July 2019, the office found.

The Wolf administration disputed the claim that people in all income brackets would pay more.

On a conference call with reporters Friday, John Hanger, Wolf's secretary of planning and policy, focused on the changes proposed for the property, sales, and personal income taxes. "We remain confident that the changes the governor's proposing to those three taxes would benefit most Pennsylvanians, and certainly homeowners up to $100,000 and renters up to $50,000," he said.

Hanger suggested uncertainty in the office's attempt to account for the effects of other changes, like those proposed for the cigarette and severance taxes.

"They are trying to expand the analysis to areas where the data sets are very weak and very difficult," he said.

The office of the Republican chairman of the House Appropriations Committee, Bill Adolph of Delaware County, said the report contradicted Wolf's claim that his policies would reduce the bill for some taxpayers.

In a statement, Adolph called the report a "telling portrayal of how the governor's massive tax increases will force all Pennsylvania taxpayers to pay more for everything from day care, nursing home care, utilities, newspapers, and more, yet fail to deliver on the net tax decreases promised by the governor."