(The Center Square) – Governor Tom Wolf’s call to raise Pennsylvania’s income tax as part of a broader plan to add $ 4 billion to the state budget was recently made at a budget hearing by a number of people checked by senators.
When Matthew Knittel, director of the state’s independent tax office, appeared before members of the Senate Committee on Funds on March 8, questions often stemmed from the proposal Wolf revealed in his budget address to increase spending on public education in early February.
From a political perspective, however, Senator Patrick Browne, R-Lehigh, believes it is important to pass laws that take into account the labor market and residents’ paperbacks.
If Wolf’s proposal is accepted at face value, Browne expects the current trend of population decline to continue into the future.
Knittel presented the committee with the demographic snapshot of his office showing the projected population decline. The IFO expects a state population of 12.76 million people in 2025, compared to 12.8 million in 2020. The forecast numbers continue to fall to 12.66 million people in 2030.
“It’s been a big problem for the past decade, if not more,” said Browne, who serves as the majority chairman of the Senate Funds Committee. “Based on my analysis, I think this is far too risky. If we don’t do something to reverse (the trend) … Pennsylvania is in trouble. “
If implemented, the increase in income tax proposed by Wolf would rise from the current 3.07 percent to 4.49 percent from July onwards. Households of four or more people who earn more than $ 84,000 annually would be affected by the increase.
Based on preliminary numbers, Knittel said Wolf’s plan would result in lower or flat income taxes for 61 percent of applicants. The remaining 39 percent of taxpayers would be affected by the increases.
“We will examine how this affects the economy,” said Knittel of the effects of an income tax hike.
During the testimony, Knittel was asked how an increase in the state’s income tax would affect the brain drain that occurred before the pandemic.
“We looked at the migration statistics in the past,” replied Knittel. “We have not yet done this for the purposes of this proposal.”
In addition to raising income tax, several lawmakers used the hearing as a platform to weigh Wolf’s proposed changes to the state’s long-running tax credit for forgiveness of poverty. The draft budget provides housing application for the loan for a family of four with a household income of less than $ 100,000 per year.
Since Pennsylvania’s poverty tax credit was last reviewed in 2004, Browne said it would be wise to review it this budget season.
But the threshold that Wolf is proposing – well above the federal poverty line – is to be exceeded, Browne said in his concluding remarks.
“I’m really afraid of expectations,” said Browne. “Up until that point, we were really clear about our expectations for (the loan).”