This page was last updated on August 7, 2004.

In a style I’ve come to expect of Mr. LaGrotta, he tries to support his position by going off-topic and calling opponents names.  In summary, Mr. LaGrotta tries to convince us we are under taxed and we should increase our debt load.  Mr. LaGrotta is a career politician.

Below is a detailed critique of the subject letter.

“I understand the questions some people may have about Gov. Rendell’s proactive ‘Plan for a New -- and Better -- Pennsylvania,’ which requires a nominal increase in taxes.  I say nominal, because with the school tax reductions that will accompany the proposal, most homeowners, and almost 75 percent of our retirees, actually will pay less in total taxes than they do now.

[RWC] Don’t you love it when socialists refer to “nominal” tax increases?  You’ll see below Mr. LaGrotta refers to tax “slashing.”  It’s funny how tax increases are always nominal, but tax cuts are always slashings.

On a side note, people who feel they must use the term “proactive” don’t know what “active” means.

“Many concerns are the result of false ‘news’ reports generated by a conservative, fringe media, including talk-show hosts worried about ratings, rather than reality.  The misconceptions they spread are rooted in the days of Ronald Reagan, when Americans were fooled into believing that government can do everything and provide all of the services people want and need, without ever increasing taxes.

[RWC] Here’s a new approach – not.  To Mr. LaGrotta, conservatives who disagree with him are liars.  In a way, the “fringe media” assertion is true.  For the most part, the “mainstream media” have a liberal bias.  I’m glad to see Mr. LaGrotta admits this.

Mr. LaGrotta must be referring to a different Ronald Reagan than the one most of us knew.  Anyone who paid even a little attention knows President Reagan would never claim, “government can do everything and provide all of the services people want and need.”  After all, it was Reagan who said, “Government is not the solution to our problem, government is the problem.”

“Look what recently occurred in California, where people -- including 38 percent of the Democrats who voted -- chose a charlatan to govern their state out of a deficit that is bigger than Pennsylvania’s entire budget.”

[RWC] How does calling the governor of California a charlatan help convince us Mr. Rendell’s “Plan for a Rust Belt Pennsylvania” is a good thing?  It’s no coincidence Mr. Schwarzenegger is a Republican, though a fairly liberal one.  Can Mr. LaGrotta provide verifiable facts supporting his charlatan accusation?

Mr. LaGrotta ignores the fact that the previous governor, a Democrat, did such a poor job that Californians voted to recall him.

Perhaps Mr. LaGrotta should leave California to Californians.  After all, no Pennsylvania politicians are in any position to throw rocks.

“1) Out of 50 states, Pennsylvania is tied for 34th in total state and local taxes paid as a percentage of income (9.9 percent).  We’re tied with Oklahoma, and -- surprise! -- our state and local tax share actually is lower than states like North Carolina (10.1 percent), South Carolina (10 percent), Georgia (10.2 percent) and even Idaho (10.5 percent) -- states, we constantly are told, are stealing our jobs because their taxes are lower.”

[RWC] Did you notice that Mr. LaGrotta didn’t talk about so-called business taxes?  Here’s why.  The Tax Foundation provides the following rankings for business taxes, where one is the best and 50 is the worst.¹

Corporate Net Income Tax Index: 35 (The TF called Pennsylvania's corporate net income (CNI) tax rate "exceptionally high".  At 9.99%, our rate is the third highest.)

Sales and Gross Receipts Tax Index: 39

Tax Base Conformity Index: 41

Further, the TF indices omitted the Capital Stock and Franchise (CSF) tax.  The Pennsylvania CSF rate (6.99 mills) is in a virtual tie with West Virginia (7.0 mills) for highest.  Pennsylvania is one of a minority of states imposing both CNI and CSF taxes.  Pennsylvania and West Virginia are the only two states that rank in the top 10 for both taxes.  By changing tax code provisions, Mr. Rendell proposed increases of the CNI, gross receipts, and CSF taxes.

“Reality check No. 1: When the talk show hosts and conservative pundits cry about all the Pennsylvania’s jobs heading south because of lower taxes, remember, that’s just not true!  What is true is that, for the past eight years, Pennsylvania did little to attract new industry, or keep existing businesses here.  Infrastructure programs -- sewage, water, roads and bridges -- so vital to a strong industrial base, were sacrificed by the Ridge-Schweiker administration in order to give their friends over $4 billion in tax cuts.

[RWC] Mr. LaGrotta says taxes are not why Pennsylvania is relatively unpopular with business, but consider the following excerpt from a Tax Foundation report.  “It is well established that the extent of taxation can affect a corporation’s level of economic activity within a state.  For example, Newman (1982) found that differentials in state corporate income taxes were a major factor influencing the movement of industry to southern states.  Two decades later, with global investment greatly expanded, Agostini and Tulayasathien (2001) determined that a state’s corporate tax rate is the most relevant tax in the investment decisions of foreign investors.” ¹

Regarding sewerage and water, those are the responsibilities of local government, not the commonwealth.

Mr. LaGrotta, please identify the friends of Governors Ridge and Schweiker who allegedly received the alleged $4 billion and how much each received.

On one point Mr. LaGrotta was right, though not for the right reasons.  PA “did little to attract new industry, or keep existing businesses here.”  We did little by not seriously addressing business taxes, a poor labor environment, and lawsuit abuse.

“Many jobs also have left because some wealthy business owners want to get wealthier by paying workers six or seven bucks an hour to slave in non-union sweat shops, or, even worse, moving jobs overseas where they can pay children pennies a day for their labor.”

[RWC] Not the worn out “sweatshop” allegation again!  Many of the “slaves” in the “non-union sweat shops” receive better pay and benefits than their union counterparts.  That’s why labor unions must employ extraordinary means in their attempts to unionize these workers.

Business owners have the right and obligation to operate where they can be the most profitable.  If you do not, someone else will and you will be out of business and your employees will be out of work.  Does Mr. LaGrotta not understand what competition means?

Does Mr. LaGrotta demonize workers who leave their employers to get better pay and benefits?  If employers seeking to pay lower wages are greedy, why is it not greed when workers seek higher wages?

“2) While Pennsylvania is well ahead of most states in terms of total state and local taxes levied, there is one category where we are the worst in the nation: the local property taxes our retired senior citizens have to pay.

“Reality check No. 2: Pennsylvania’s personal income tax is not the problem for our retirees.  In 2001, a married Pennsylvania couple aged 65, with a comfortable annual income of $60,000, paid NO state income tax.

“However, if that couple lived in a median-priced home, which probably took 30 or 40 years to pay off, they paid an average of $6,551 in property taxes.  That figure, by far the highest in the nation, is almost $800 a year more than second-place New Jersey ($5,788).”

[RWC] How does Mr. LaGrotta know $60,000 is “a comfortable annual income” for a retired couple?  What if they are putting children and/or grandchildren through college?  What if they plan to travel?  If $60,000 is comfortable, would $65,000 make the couple “rich.”  This is another example of a liberal telling us what is appropriate for us.

If the couple “probably took 30 or 40 years to pay off” their house, isn’t it reasonable to expect they knew what to expect with respect to taxes?  After all, property taxes and their ever-increasing nature have been with us for decades.  Are we to believe the couple couldn’t prepare with 30+ years of lead-time?

Mr. LaGrotta didn’t cite the source of his property tax data so I can’t evaluate it directly.  Even so, I have reason to doubt his figures.

One reason is the Tax Foundation rates PA property taxes “Middle of the Pack.”²

I can also provide a real example that would appear to refute LaGrotta’s data.

Consider the following real house.  It is a four-bedroom, two-bathroom house with a living room, dining room, kitchen, full basement, and a two-car attached garage on ½ acre in a good, well-maintained neighborhood in a good municipality (Center Township, Beaver County) with sewers and municipal water.  The school district is good and the township is home to three colleges (Community College of Beaver County, a Mountain State University extension, Penn State – Beaver Campus).  Shopping is good and access to both Pittsburgh International Airport (a 20-minute straight shot on PA 60) and Pittsburgh (35 minutes) is convenient.  Based on recent house sales in the area, it’s probably fair to estimate the market value of the house is $125,000.  The total (county, government school district, township) tax bill for this property is less than $2,500/year, far below Mr. LaGrotta’s $6,551 for “a median-priced home.”  I don’t know if Center’s total property tax of 67.8 mills is average or above or below.  Again I don’t know, but the large number of “evil” <g> businesses in Center may keep the overall tax rate lower than average.

For those of you who attempt to check my numbers, you will note that 67.8 mills (0.0678) times $125,000 is $8,475, not less than $2,500.  Why is that?  Ask the folks who determine the “assessed” property value that government uses for the tax calculation.  I have found no relation between the assessed value and the true market value (what you could sell your house for).

To reach the $6,551 in property taxes claimed by Mr. LaGrotta, a Center Township house would have a market value of about $325,000.  I can’t speak for all municipalities, but I think it’s fair to say $325,000 is way, way above the average market value of a Center Township house.  I suspect that’s true for Beaver County and all of Pennsylvania.

Let’s look at the term “median.”  Most of us believe median is the same as “average” and “mean.”  That’s not correct, though even my thesauruses (thesauri?) consider median and mean to be synonyms.  Used properly, median simply means the middle number in an ordered set of numbers.  For example, the median of “1, 2, 8, 9, 10” is 8.  The average/mean is 6.  As you can see, the median is 33% higher than the average.  Sometimes, people deliberately misuse the term median to present a number that works better for their premise.  Again, Mr. LaGrotta didn’t cite his data source so I can’t tell if his use of median is correct or not.

“3) Gov. Rendell and House Democrats are finally taking action to create new jobs in Pennsylvania; numbers that really took a nose dive during the last administration.  Those numbers again?  Over $4 billion in tax cuts for big business under Ridge-Schweiker.  The result?  Pennsylvania was ranked 48th nationally in new job creation.  And remember, that occurred during the largest peacetime economic expansion in U.S. history.

“Reality check No. 3: They had their chance.  They slashed business taxes.  We lost jobs.  Bottom line: It didn’t work.”

[RWC] Mr. LaGrotta claims PA “slashed business taxes,” yet PA business tax rankings remain pretty bad as described above.  “Slashing” only helps if you reduce the taxes to an attractive level.  Given our business tax rankings, we didn’t cut those taxes anywhere near enough.  How can Mr. LaGrotta say with a straight face that we slashed business taxes when we have the third highest corporate net income tax, we’re tied for the highest capital stock and franchise tax, and Pennsylvania is one of only two states that rank in the top 10 for both taxes?  In fairness, the CSF tax is scheduled to phase out by one mill per year, but its phase-out has already been slowed and stopped once.  As a result, businesses probably don’t have much faith the tax will really disappear, or won’t be replaced by another tax.  Remember, part of the Rendell plan was to close business tax “loopholes,” the result of which is to raise the effective tax rate.  Mr. Rendell and the General Assembly give with one hand and take away with the other.

The “we lost jobs” during “the largest peacetime economic expansion in U.S. history” assertion is false.  Between 1992 and 2002, jobs in Pennsylvania increased by 11.4%, though below the national growth of 19.9%.³

“Now we propose to create new jobs by being proactive: by borrowing $2 billion, and using that money to attract $5 billion more in private investment.

[RWC] Yeah, that’s what I want.  A bunch of career politicians to take my money and play venture capitalist.  If I were going to throw my money away, I’d rather burn it.  At least that way I’d benefit from the heat.

If a business “opportunity” requires a government to subsidize (read: “bribe”) private investors, it’s a loser.  Does anyone in western Pennsylvania remember Lazarus and Lord & Taylor, both recipients of taxpayer dollars?  Lazarus closed after barely five years and Lord & Taylor announced in 2003 it would close by the end of 2005 unless it could find a buyer for the store.  In both cases, tens of millions of taxpayer dollars were wasted.

Remember the economic boom the new Pittsburgh baseball and football stadiums and the convention center would bring?  What happened?  It’s also useful to remember 65% of voters in 1997 voted against the stadiums, but politicians “knew better” and built them anyway.

“The effect on Pennsylvania taxpayers will be minimal, since we rank only 34th out of 50 states in outstanding state debt per capita -- a statistic even more impressive when one considers Pennsylvania is the fifth-largest state in the nation.”

[RWC] Did Mr. LaGrotta never learn about economies of scale?  He wants us to believe larger states should have larger per-capita debt.  All things being equal, the reverse should be true.  Up to a point, the per-capita debt of larger states should be lower than for smaller states.

Here’s an example of what I mean.  Let’s assume two states need to build similar bridges at a cost of $100 million.  One of the states has 10 million residents and the other has 20 million.  The per-capita debt of the larger state will be half that of the smaller state.  In fact, the debt would probably be less than half because the larger state may be able to afford a larger down payment.

Mr. LaGrotta is really reaching for things to convince us we are under taxed and need to incur more debt.

“The effect on Pennsylvania’s economy will, however, be immediate and dramatic.  This innovative economic development proposal will pay for itself many times over, with the new jobs it will create, reduced unemployment compensation payouts, and the new taxes collected from new businesses and new workers.”

[RWC] That’s what communists – and their apologists in the U.S. – claimed about the Soviet Union for 70 years, until the USSR collapsed under central economic planning of the type advocated by Mr. LaGrotta.  The only proven economic development plan is a business-friendly environment with minimal government interference.  Mr. LaGrotta’s promises are the same as those made for the failed “investments” in Pittsburgh noted above.

“4) Finally, and most critically, there is the plan to improve education.  While Pennsylvania’s school taxes are the highest in the nation, our kids’ College Board scores are among the lowest.  Yes, it’s a fact that Pennsylvania students rank an embarrassing 45th out of 50 states in this category, and those scores are getting worse every year.

“Reality check No. 4: This is an area where Gov. Rendell and progressive House Democrats agree with Republican President George W. Bush.  In his ‘No Child Left Behind’ initiative, the president maintains that the way to improve scores and give our kids a better education is by targeting early childhood education -- the preschool through fourth-grade years -- when kids develop learning skills that will last their entire lives.  Gov. Rendell’s plan does just that.

“President Bush plan also calls for early identification of special-needs students, coupled with providing the extra help they need.  Rendell’s plan also does that.

“In fact, the only difference between what President Bush has promised, and what Gov. Rendell wants to provide, is the money to pay for the programs.

“As a lifelong resident of Pennsylvania, and an 18-year member of state house, I am not satisfied with Pennsylvania’s ranking educationally, economically, or in terms of high property taxes, and I believe that when given the facts, most Pennsylvanians will agree.  That’s why it is so important to make sure people know the facts about what we’re really trying to do in Pennsylvania, why we’re doing it, and how our efforts will make Pennsylvania a better place to live.”

[RWC] Before I begin, I need to note some hypocrisy on the part of Mr. LaGrotta.  In an e-mail note to me, Mr. LaGrotta called President Bush a liar.  If Mr. Bush were such a liar, why would Mr. LaGrotta reference his proposals?  Perhaps Mr. Bush is a “liar” only when he and Mr. LaGrotta disagree – which is probably most of the time.

Mr. LaGrotta admits PA ranks at the top of government education funding yet ranks near the bottom in terms of education achievement.  And his solution is to give the government schools more money!?  Is he serious?  When you pay top dollar for a product or service but receive poor quality, do you offer to pay even more?  When you buy a “lemon,” do you keep going back to the same vendor?  Of course not.  You demand a refund and look for another vendor who will meet your expectations.  A responsible school voucher program is a way to do that for government schools.

The last thing politicians want is for the people to “know the facts about what we’re really trying to do in Pennsylvania [and] why we’re doing it.”  In general, politicians want us to believe their fairy tales without question.

“Pennsylvanians elected Governor Rendell by a solid margin, and he is desperately trying to fulfill his campaign pledges to reduce school taxes, give more Pennsylvania kids the chance to get a better education, and reverse the job losses that occurred during the previous administration.”

[RWC] Mr. Rendell won with 53% of the vote, barely a majority.  Mr. LaGrotta has low standards if he believes three percent is a “solid margin.”  I’m sure some people will argue the margin was six percent – still small, but in a zero-sum situation, it would take only three percent of the voters to switch to cause a tie.

“Pennsylvanians cannot be satisfied with the way the last administration left our great Commonwealth.  We know we can do better.  Both Democrats and Republicans in the state house are working with Gov. Rendell to make changes - positive changes -- that will benefit all Pennsylvanians.

“Because, as the facts and figures prove, the last thing Pennsylvania needs is more of the same.”

[RWC] I’m not satisfied with the state of the Commonwealth.  The fact is, though, the Republican administration was little more than a “conservative” Democrat administration.  Likewise, as a group, General Assembly Republicans do not have conservative beliefs.  Spending during the Ridge/Schweiker years actually increased more than during the previous Democrat administration.  There’s a difference between having a Republican administration and a conservative administration.

What we need are an administration and a General Assembly that truly believe in conservative values and would be willing to stand behind those beliefs.  The last thing The People’s Republic of Pennsylvania needs is the continued infiltration of socialism.

1. State Business Tax Climate Index; Scott A. Hodge, J. Scott Moody, M.A., Wendy P. Warcholik, Ph.D.; Tax Foundation; May 2003.

2. The Facts on Pennsylvania’s Tax Climate; Tax Foundation; 2004.

3. Change in Employment, 1992-2002; Pennsylvania Economy League; 2004.

© 2004 Robert W. Cox, all rights reserved.