David Letterman would have been proud. The “drown government in a bathtub” crowd put on a show earlier this week complete with props, kids, and stupid math tricks. Unfortunately, the whole show was missing something important: facts.
Pay attention here—we’ll walk you through how the Commonwealth Foundation (CF) tried to make the numbers walk on hind legs and bark. To estimate the overall impact of the Wolf budget plan on a typical family, CF added together all the proposed tax changes, whether a typical family would ever pay them or not, and divided this figure by the magic number of 3,179,000—exactly one-quarter of Pennsylvania’s population. CF labels the result what a “four-person family” would pay. Perhaps it created the “family” figure rather than merely dividing by the total number of people in the state because, well, it’s four times bigger. (For good measure, CF also added together the tax changes for 2015-16 incorrectly—see page C1-6 of the proposed budget for the correct total.)
The CF “average” is also inflated because it includes severance, corporate, and bank tax changes—all taxes families typically do not pay. Again, this helps make the figures bigger.
Here’s the most important point: the figure that CF computes is a mythical—and meaningless—average. It doesn’t tell us anything about what an actual or average family pays or saves under the plan.
An honest analysis of the impact of the governor’s budget proposal on real families requires looking at what households with different income levels, housing situations, and addresses actually pay in sales and income taxes and how they benefit from a reduction in property taxes.
That requires anti-taxers to do some real analysis, including using income tax and consumer spending data. The impact on actual families depends on their situation (their income, where they live, what they buy, if they own or rent, and the value of their home). That’s a lot harder than taking the total and dividing by the number of “families.”
Based on what we know about the plan and the Wolf administration’s own estimates, you will likely benefit financially if you live in a lower-income or “higher-taxed” (relative to income and property wealth) area. Regardless of where you live, renters earning up to $50,000 a year and homeowners with incomes up to $100,000 will likely benefit financially, too, according to the administration (we’ll check on that).
We all benefit from the increased state funding of schools. Our kids get a better education, funding won’t vary so much from district to district, and school districts become less reliant on local taxes.
We’ve had too many years of budgets based on stupid math tricks that tried to hide the impact of not increasing state taxes. This unjustified and ineffective austerity led to cuts in classroom funding coupled with higher local property taxes. The results aren’t surprising—lower test scores, fewer educational opportunities, and a state economy falling farther behind the rest of the nation. Stupid math tricks don’t work, and neither does a state budget based on them.