EDITORIAL: State policy penalizes working class
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Pennsylvania lawmakers regularly give away the store to wealthy interests. The theory is that it’s necessary to compete with neighboring states for development that benefits everyone through economic activity and job creation.
Perhaps the flagship example is the $6 billion Shell petrochemical refinery in Beaver County that the state government has subsidized with a record $1.7 billion in tax credits.
If that model works, though, lawmakers need to explain the finding by the government’s nonpartisan Independent Fiscal Office that low-income Pennsylvania workers are paid less and taxed more than their counterparts in surrounding states.
That flows from state policy. Pennsylvania is the only state in the Northeast that continues to cling to the $7.25 hourly minimum wage that Congress implemented in 2009. New Jersey’s hourly minimum wage is $14 and New York’s is $15. And a New York Federal Reserve study conducted several years ago demonstrated that the higher New York wage has not adversely affected businesses in New York that border Pennsylvania.
Pandemic-induced labor shortages have put upward pressure on wages, but the higher minimums elsewhere mean that thousands of Pennsylvanians still work for much less than their counterparts with comparable jobs in surrounding states.
And the state government, which has begun a multi-year plan to reduce the corporate net income tax by more than 50%, from 9.99% to 4.9%, continues to maintain a flat personal income tax rate that penalizes low-income workers.
The flat personal income tax rate is 3.07%, which is toward the lower end of the range among the 43 states and the District of Columbia that impose such taxes. But because the Pennsylvania rate is flat, the effective tax rate for working class people in New York, New Jersey, Delaware, Maryland, West Virginia and Ohio is lower, according to the IFO.
Democratic state Sen. Art Haywood of Montgomery County asked for the study. As he put it, “Pennsylvania punishes those earning under $30,000 with the highest taxes and lowest minimum wage.”
Lawmakers compound that injustice by failing to fairly fund public schools and badly shortchanging higher education.
When pondering economic policy, legislators need to include a bottom-up perspective before relentlessly passing incentives from the top, down.
-Wilkes-Barre Citizens’ Voice