Update to the Fair Share Tax Plan to Support Public Investment in Pennsylvania

From the Pennsylvania Budget and Policy Center (http://www.pennbpc.org):

PENNSYLVANIA – The Pennsylvania Budget and Policy Center today released an update to a revenue proposal that would raise $2.2 billion annually, while cutting taxes or leaving them level for 82% of Pennsylvanians.

The Fair Share Tax plan represents a major step toward fixing Pennsylvania’s broken tax system and raising the revenues we need to invest in the public goods that are critical to creating thriving communities and individual opportunity in our state: education, infrastructure, protection for our air and water, and human services. The calculations included in this plan are an update to similar proposal put forward by the PA Budget and Policy Center in 2017.

• The Fair Share Tax divides our Personal Income Tax into two new taxes: 1) a tax on wages and interest and 2) a tax on income from wealth (dividends; net income from a business, profession, or farm; capital gains; net income from rents, royalties, patents, and copyrights; gambling and lottery winnings; and income from estates or trusts.)
• The Fair Share Tax increases the tax on income from wealth from 3.07% to 6.5% and decreases the tax on wages and interest from 3.07% to 2.8%.
• Under the Fair Share Tax, 47% of taxpayers will see their taxes go down, 35% will see no change in their taxes, and only 18% will see their taxes go up.
• The Fair Share Tax brings in $2.2 billion in new revenue, 80% of which comes from the richest fifth of Pennsylvania taxpayers and 16% of which comes from out-of-state taxpayers. This means that only a tiny 4% of the additional revenue comes from the bottom four-fifth of Pennsylvania taxpayers.
• Considering only Pennsylvania taxpayers who see their taxes increase (I.e., excluding non-residents who pay taxes to Pennsylvania), 51% of the new revenues comes from the top 1% of families, 75% comes from the top 5% of families, and 88% comes from the top 20% of families.
• There is little variation in the impact of tax from one county to another or one legislative district to another. The shares of taxpayers in a county that sees a decrease or no change in their taxes ranges from 73% to 91%, with all but four counties at under 80% or over. Under the Fair Share Tax, 81% of taxpayers in urban areas and 86% of rural taxpayers will see their taxes go down or remain the same.
• Even after implementation of the Fair Share Tax, the effective rate on the top 1% of Pennsylvania taxpayers will be only 3.9%, less than that of any neighboring state other than Ohio.

Read the full proposal here.

See how Pennsylvanians in each state Senate district would fare under the Fair Share Tax Plan here.

See how Pennsylvanians in each state House district would fare under the Fair Share Tax Plan here.