From the Pennsylvania Budget and Policy Center (http://www.pennbpc.org):
Over the holidays, the PA Budget and Policy Center released an important proposal, outlining a comprehensive plan to close the state’s looming deficit and give lawmakers the financial flexibility to invest in our communities and our schools.
Central to the plan is splitting Pennsylvania’s personal income tax in order to tax different classes of income at different rates. The plan would keep the tax on wages and interest close to its current rate (while increasing tax forgiveness for those with low incomes). But it would raise the tax rate on dividends, capital gains, business profits, royalties, and estates—which we call “income from wealth”—to 4.5%. Over two-thirds of the revenue raised by this tax would fall on the top 5%, while 82% would be paid by families with incomes above $95,000.
Combined with some other measures, the proposal would generate $2.5 billion, going far to overcome the two-year deficit. And because income for families in the top 1% are growing rapidly (while that of other families stagnate) and natural gas prices will rise again, our proposal would generate growing revenues long into the future.
Here are all the components of the plan:
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