The GOP-controlled Pennsylvania Senate has approved the largest tax cut in Keystone State history, slashing taxes by $3 billion.
The proposal is a Republican rebuttal to Democrat Gov. Josh Shapiro, whose proposed $48.3 billion state budget would increase spending by $3.7 billion or 8.4 percent over the current year.
Senate Bill 269 passed the Senate in a 36-14 vote over the objections of Democratic leaders, though eight Democrats broke ranks to back the GOP proposal.
It would reduce the Personal Income Tax (PIT) rate from 3.07 percent to 2.8 percent, lowering the income tax to its pre-2004 rate.
“If you work and pay taxes, you deserve a tax cut. People should keep more of their own hard-earned money,” said Delaware Valley Sen. Jarrett Coleman (R-Bucks). “This plan could jumpstart Pennsylvania’s economy by putting $3 billion back into the pockets of taxpayers, who then could spend or invest it in our communities.”
It would also eliminate the gross receipts tax on energy, effective on January 1, 2025, providing relief from high energy costs. The 4.4 percent gross receipts tax on profits of private electric utilities is passed along to consumers.
“Cutting income taxes and the tax on energy bills is a much better option than the governor’s plan for new government spending,” said Montgomery County Sen. Tracy Pennycuick (R). “The Senate Republican Caucus plan invests $3 billion into all Pennsylvanians, by lowering their utility bills and adding more money to their paychecks – not by massive expansions of government programs.”
The state’s free-market think tank also supports the bill.
“We applaud the Senate for putting taxpayers first and passing SB 269,” said Commonwealth Foundation Senior Vice President Nathan Benefield. “Voters overwhelmingly express concerns with the rising cost of living. Simultaneously, they believe Gov. Shapiro’s proposed budget spends too much and want lawmakers to reduce wasteful government spending.
“In contrast to Shapiro’s massive, unending deficit spending and proposed energy taxes, the Senate plan would keep more money in the hands of working families while reducing energy costs,” Benefield said.
The two sides are debating what to do with the $14 billion in excess revenue Pennsylvania will have in reserve as of July 1. Shapiro has proposed major spending increases, including an additional $1 billion in public school spending. He says the GOP proposal is a sign that “Senate Republican leaders are … acknowledging that we must invest in Pennsylvania’s future,” according to a statement from his office.
Tomeka Jones-Waters, president of AFSCME Local 2587 says the tax cuts would be bad for government workers and the Pennsylvanians who rely on them for services.
“A $3 billion tax cut to public services would be detrimental for workers and their families, and to families in need of these services to survive,” Jones-Waters said. “Instead of giving tax cuts to the wealthy, invest that money in those who need it most.”
But Republicans retort that if the taxpayers have overpaid for government, that money should go back to them — not spent by politicians in Harrisburg.
“Given the state’s current financial position, I believe the most responsible thing we can do today is to give this money back to the hard-working families and small businesses I represent in Berks and Montgomery counties,” said Pennycuick.
