BCT Editorial – 3/7/08

This page was last updated on March 8, 2008.

Hot-air production; Editorial; Beaver County Times; March 7, 2008.

This editorial subtitle is “Report on effectiveness of state governments helps put Harrisburg politics on notice.”

I’ll focus on the editorial’s concluding paragraphs.

“One more bit of information from the report: The commonwealth’s spending per capita is $5,218, which ranks 27th among the 50 states. Also, it is sixth in population and sixth in total state spending. Basically, in the overall scheme of things, state spending is not out of control.

“Keep that in mind when hot-air production increases in Harrisburg as the June 30 budget deadline approaches. For the most part, it’s politics, pure and simple. Imagine how much better Pennsylvania would be if its elected leaders focused on governing instead.”

Gee, what a surprise! A conclusion from the Times that “state spending is not out of control.” FYI, the editorial had to come to this conclusion to be consistent with previous editorials telling us PA taxes are OK.

Of course, in coming to its conclusion, the Times is guilty of “grading on the curve.” In other words, as long as most other states overspend, our overspending will appear OK in comparison.

Let’s put the “state spending is not out of control” in historical context so we’re not grading on the curve.

A source frequently used by the Times, the Tax Foundation reports 2007’s overall (local, state, federal) tax rate consumed 32.7% of our paychecks, pension checks, et cetera. That makes our current tax rate 6.4 times what it was in 1907 (5.1%), 25% higher than its highest point (26.1% in 1943) during World War II, 7.6% higher than it was in 1977 (30.4%), and only 4% lower than the peak of 34% in 2000. Keep in mind these figures are taxes only. They don’t include user fees (tolls, vehicle registration, etc.), proceeds from state-run lotteries, et cetera.

The above figures were for overall taxes, so let’s look at a little bit of PA tax history from the PA Department of Revenue website. We didn’t have/need a PA personal income tax until 1971. Since then, the rate has risen from 2.3% to 3.07%, a 33.5% increase. Since 1954, the PA sales and hotel occupancy taxes have risen from 1% to 6%, an increase of 500%. Of course, the increase is 600% in Allegheny and Philadelphia counties where these taxes are currently 7%. The “temporary” Johnstown Flood Tax on liquor started out in 1936 at 10% and is now 18%, an 80% increase. The Corporate Net Income tax was 6% in 1935 and is now 9.99%, and increase of 66%.

It’s no wonder the Times likes grading on the curve when it comes to government taxation and spending.