This page was last updated on June 27, 2011.
Education cuts will be costly; William A. Cashaw; Beaver County Times; June 24, 2011.
Below is a detailed critique of the subject letter.
“In response to the June 12 letter ‘Don’t defund education,’ I would like to elaborate further upon some of the complications that the proposed budget cuts would cause.
“The loss of teaching positions would increase the student-to-teacher ratio in our children’s classrooms. The swelling class sizes will hobble the ability of teachers to provide each child with sufficient attention.
“Aliquippa’s PSSA scores are already borderline, and if we reduce the help each child is able to receive, our scores are bound to decline. This is a tremendous concern for our children and for us as a community.”
[RWC] Data from 2006 indicates the Aliquippa School District may have some room to work on reducing its budget. As of 2006, Aliquippa spent $13,975 per student-year. That figure was $11,254 in the nearby Center Area School District (now part of Central Valley School District) and $12,312 for the state average. If anyone can point me to more recent data, please let me know.
Why do some folks insist throwing taxpayer dollars at the public education industry will make it better? According to Education Week, in 2006 PA ranked #12 in per-pupil expenditures. According to the Commonwealth Foundation, PA K-12 spending “increased from $4 billion in 1980 to over $25 billion in 2009 - a 133% increase in per-pupil spending, from $6,171 to $14,420 (in 2010 dollars).” If throwing money at government education works, how can “Pennsylvania lag behind many of the other 49 states in education success” as another letter writer claimed?
“All heads of households know that when the household budget gets tight, we must ensure that the children have what they need first.”
[RWC] Ah, the emotional plea. The victim group varies with the issue.
“Pennsylvania corporations are making tremendous profits, yet they’re paying a significantly smaller percentage of their yearly income in taxes than many average families do.”
[RWC] “Pennsylvania corporations are making tremendous profits?” If true, this is good news for pension plans, 401(k)s, IRAs, et cetera. Why does Mr. Cashaw hate the elderly? <g> It would have been nice if Mr. Cashaw had mentioned the info sources for his claims.
“Doesn’t it make sense to balance the budget by having corporations pay their fair share of taxes? Otherwise, our children and community will be forced to sacrifice more than our consciences should allow us to give up.”
[RWC] Have you noticed how generous some folks are when they think they’re spending someone else’s money?
To begin, I oppose so-called “business taxes” for at least two reasons. First, corporation income taxes are double taxation. That is, the government taxes a corporation’s taxable income and then taxes the dividends (after-tax profits) shareholders [including pension plans, IRAs, and 401(k)s] receive. Second, business taxes are a scheme to hide true taxation from the ultimate taxpayers, you and me. In some cases, businesses are prohibited by law from itemizing taxes on their invoices. You see, businesses - like government - don’t have any money; it all belongs to the owner(s). One way or another, business taxes are paid by individuals - customers, employees, and owners. According to the Tax Foundation, the average U.S. taxpayer worked eight days in 2002 to pay federal income taxes levied on corporations. In addition, we worked a fraction of a day to pay other business taxes. Business taxes are approximately seven percent of our total personal tax burden. That is, seven out of 100 tax dollars we pay are business taxes. Unfortunately, a lot of people like Mr. Cashaw don’t know this fact or choose to ignore it.
At a flat 9.99%, PA’s Corporate Net Income (CNI) tax is second only to Iowa’s top rate of 12% for income over $250,000. In addition, PA corporations must also pay the Capital Stock and Franchise (CSF) rate of 2.9 mills, fifth highest in 2010. Pennsylvania is one of a minority of states imposing both CNI and CSF taxes. As of 2009, Pennsylvania and Massachusetts were the only two states that ranked in the top 10 for both taxes.
According to the Tax Foundation in 2010, “If Pennsylvania were its own country, it would have the highest overall corporate tax rate in the world at 41.5% (federal plus state, accounting for the state-local deduction).”
Since Mr. Cashaw believes “it make[s] sense to balance the budget by having corporations pay” more taxes, does he really believe increasing PA business taxes by $4.1 billion makes sense? FYI, that would nearly double current PA corporation tax revenue, that is until many of these businesses closed and/or moved to other states and/or countries.
I’ll conclude with some facts from the PA Department of Revenue as of May 2012’s collections. Compared to the 2009/2010 fiscal year (July through June), personal income and sales tax revenue for FY 2010/2011 are up 5.6% and 4.6%, respectively. In comparison, revenue from those evil corporate tax cheats is up 8.7%, with CNI and CSF tax revenue up 25.5% and 11.5%, respectively.
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