LaTonya Greene – 6/12/11

This page was last updated on June 27, 2011.

Don’t defund education; LaTonya Greene; Beaver County Times; June 12, 2011.

Below is a detailed critique of the subject letter.

“As a mother of three (soon to be four) children attending Aliquippa schools, I am very concerned about the state’s defunding of Aliquippa’s education.”

[RWC] “Defund” appears throughout this letter. In most common usage, “defund” means to cut off all funding. The current proposed budget reduces the commonwealth taxpayers’ subsidy for all schools but comes nowhere near “defunding” the schools.

“Why, why would we take from education? The teachers here take so much pride in their work and are truly there for our children.”

[RWC] Here’s why. We have about a $4.1 billion projected deficit (before Gov. Corbett’s proposed budget) and while just about every aspect of government spending needs to be cut, the really big ticket items need the most attention. That brings us to education and health & human services funding. Even in the proposed budget, General Fund spending on education is 38.9% of the total. Health & human services is in first place with 43.5% of the total. Simple addition (82.4%) tells us no other category even comes close to these two. “Protection of Persons and Property” comes in a distant third at only 11.2%. If we can’t reduce the big ticket items, we can’t reduce the deficit without making things worse down the road. As for increasing tax rates to reduce the deficit, PA is in no position to do that, especially in the current economy.

“To my utter chagrin, the state budget being proposed would defund our district and would cause at least 20 educators to be lost as resources for our children.”

[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.

“We need to ask ourselves what we can do as parents, educators and community members to ensure that our children have a strong educational foundation.”

[RWC] When did throwing money at the government’s education industry “ensure that our children have a strong educational foundation?” 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?

“We need to let our elected state officials know that big business’s profits can’t come before the future of our children and community. We must close corporate tax loopholes to balance the state budget instead of sacrificing our children’s educational resources.”

[RWC] 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.

Note Ms. Greene’s use of the term “loophole.” A loophole is a legal provision of the tax code you don’t like, usually because you don’t believe it benefits you personally. For example, if you didn’t like the home mortgage interest deduction because you rent or your house is paid for, you would call it a loophole because the deduction reduces the tax liability of taxpayers who can use it. You would claim the deduction (loophole) allows some taxpayers to escape paying their “fair share” of taxes. That’s what Ms. Greene is doing with legal provisions of the PA tax code. To increase collections, Ms. Greene wants to eliminate certain legal deductions and/or exemptions. What follows is some information Ms. Greene probably doesn’t know or chooses to ignore.

The reason provisions like the “Delaware Tax Loophole” mentioned in other letters exist is to help mitigate the problem of a high tax rate. 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).”