EmailEmail
PrintPrint
Opponents lining up against Pa. tax increase
Friday, June 19, 2009

HARRISBURG -- Avalon resident Tracy Camerota is the kind of voter who's making state legislators sweat bullets over a proposed 16 percent increase in the personal income tax rate.

"Gov. [Ed] Rendell wants more money? This man is ridiculous," she said in a phone interview yesterday.

"My daughter lost her job and she and her two small children had to move back with us. My husband took a 10 percent pay cut last month and he's lucky to keep his job. We have to live within our means and state government should, too. Prices are up every day. I will never vote for a 'spendocrat' in my life."

What has her upset is Mr. Rendell's call this week for the Legislature to increase the state income tax rate to 3.57 percent, up from the current 3.07 rate. Mr. Rendell said the increase would only be "temporary" -- for the next three years -- and would generate $1.5 billion a year in additional revenue. This would help erase the state's current $3.2 billion budget deficit, he said.

"It's inescapable that we have to raise revenues," he said yesterday. "I'm not the one driving the budget -- the numbers are driving the budget. I know that recommending a tax increase won't do much for my popularity. If there were a way to avoid it, I would."

The higher income tax has been rejected by most if not all of the 99 Republicans in the House, said GOP leader Sam Smith of Punxsutawney. The call for the tax hike is really giving the heeby-jeebies to the 104 House Democrats, since they are members of the governor's party.

Such a tax increase must start in the House, and if it were to squeeze through there, it would face even more uncertainty in the Senate, which is solidly controlled by Republicans.

In the House, there is a group of 20 or so fiscally and socially conservative Democrats, called "Blue Dog Democrats" (after the name of a similar group in Congress) who may well join the Republicans in blocking the higher income tax.

They are caught between doing the wishes of the leader of their party and many of their constituents, who feel the way Mrs. Camerota does.

Blue Dog Democrats are mainly legislators from Western or Central Pennsylvania "who feel we should keep our spending within reason," said Rep. Gary Haluska, D-Cambria.

Rep. Nick Kotik, D-Robinson, is the Blue Dog leader and he opposes the tax increase. He had a meeting with his cohorts on Tuesday, soon after Mr. Rendell unveiled his tax increase plan and they weren't any more enthusiastic.

"We're having a hard time with that increase," said Rep. Bill Kortz, D-Dravosburg, who was at the meeting. "There isn't a lot of stomach for it. It will be a hard sell. The first thing we have to do is cost-cutting."

Mr. Haluska noted that a family of four that earns less than $32,000 a year is exempted from the income tax, as are retired people. "This means the people in the middle, who work for a living, are getting squeezed," he said. "They are the ones making this country productive."

An income tax increase also could hurt small businesses, since they pay state taxes based on that rate rather than the corporate net income tax rate. Mr. Haluska said he'd rather increase the state's 6 percent sales tax (which is 7 percent in Allegheny and Philadelphia counties), because it has exemptions for food and clothing.

The higher income tax isn't Mr. Rendell's only revenue-raiser to balance his proposed 2009-10 budget of $28.9 billion. He also wants to delay the phaseout of a tax on business assets; increase the cigarette tax; enact a new tax on cigars, smokeless tobacco and natural gas extracted from Marcellus shale wells; dip into the state's "Rainy Day Fund'' for emergencies; and tap a surplus in a fund to help doctors pay for medical malpractice insurance.

Rep. Tony DeLuca, D-Penn Hills, said he could support the new tobacco taxes but isn't ready to vote for a higher income tax. He said the Legislature first must make sure that "all the fat" has been cut out of the budget.

"Until I see that all the spending cuts that should be made have been made, I can't support an increase in the income tax," he said.

Mr. Rendell said some legislators may oppose the income tax increase out of fear that a yes vote might cost them their seat. But he said that didn't happen the last time the income tax was raised, in January 2004, when, at Mr. Rendell's urging, it rose from 2.8 percent to the current 3.07 percent. Only one incumbent was turned out of office that November, he said.

The budget is supposed to be approved by June 30, but Mr. Rendell never has had a spending plan approved by that time.

Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 717-787-4254.
First published on June 19, 2009 at 12:00 am
Featured Homes
Featured Rentals