It’s been a while since Pennsylvania had a Republican governor and a Republican dominated legislature.  The state’s budget crisis handed the newly elected GOP Governor Tom Corbett a golden opportunity to solidify his party’s leadership in the state house, and perhaps push Pennsylvania, a key swing state with lots of electoral votes, toward a Republican presidential candidate in 2012.  After yesterday’s budget proposal speech, though, the opportunity might very well turn out to be a missed one, and if the early reactions are an indication of what’s happening in the state politically, Corbett may have just guaranteed that he will be a one term governor. 

Somehow, Corbett had to find a way to slash something like $4 billion from the state budget.  Yesterday, in announcing his initial budget proposal, few recipients of state funding escaped the budget cutting axe.  Education took a hit, with colleges and universities seeing a large percentage of their state funding evaporate, and the state’s public education system also got whacked and trimmed, back to 2008 levels.  State employees were chided for even thinking that they deserved a raise during a major recession and budget crisis, and were told to tighten their belts, pay more for health insurance on a smaller salary, and be grateful that they still had a job. 

Unfortunately, the austerity and the wielding of a budget cutting axe didn’t extend to the governor’s office.  While other state employees will feel the pinch, those lucky enough to be GOP insiders in the governor’s office got substantial raises, more money than former Governor Rendell paid them by an average of $13,000 per year per employee.  And these are state workers who don’t have to pay a penny for their health insurance benefits, either. 

Nor did Corbett cut his own salary.   Oh, there was some talk about donating the difference to charity, but big deal on that, since he gets a tax credit for doing it.  So this looks like exactly what it is, and there aren’t many Pennsylvania voters who are missing this note.  In the face of all the governor has proposed, this just doesn’t look good, and a lot of voters are asking why. 

It’s also hard to tell, at this point, whether the cuts are for real, or whether this is a tax cut for the wealthy and the corporations that will ride the back of the ordinary citizen.  There’s no doubt that big business, right up to the companies lining up to tap and market Pennsylvania’s natural gas reserves, escaped tax liability.  It’s that GOP tendency to make sure that business gets advantages to create jobs, even though they had the same advantage during the Bush administration and didn’t create jobs then.  Will it do so now?  Hard to say, though I tend to think that the bigger the company, the more tempted they will be to hoard their resoures.

The budget needs to be cut, that’s for sure.  I’m not sure this is the best way to do it.

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About LS

I'm 56, happily married for 25 years, B.A., M.A., career educator with experience in education as a teacher and administrator, native Arizonan living in Pennsylvania, working on a PhD and a big fan of the Arizona Wildcats, mainly in football and basketball.

10 responses

  1. “Oh, there was some talk about donating the difference to charity, but big deal on that, since he gets a tax credit for doing it. ”

    That’s misleading, as the “credit” is a deduction from income, not from taxes. So he’s exactly where he’d be were he to reduce the pay by that much.

    But it is true that, if he’s asking other state (well .. Commonwealth…) employees to cut their pay, he should do the same himself.

  2. Christiane says:

    The top two percent needs to pay their fair share of taxes. The weight is now on the middle class, and is increasing, while many states grant more and more to the wealthiest and to corporations. But the jobs . . . they go overseas.

    The slashes to education (even K-12) in states is beginning to get obscene, while the breaks to corporate donors increases.

    A Republican may say ‘Vote for me, I’m anti-abortion’;
    but after tonight, Ash Wednesday, people will only hear, ” I’m anti-union.”

  3. K Gray says:

    What share do the top 2% pay?

  4. Lee says:

    With loopholes, tax abatements, business incentives and other ways of avoiding tax, most of those in that top 2%, along with a lot of corporations and big businesses, pay little to no tax. Here in PA, the governor’s budget proposal included no new taxes, except what that really means is that local entities, the counties, school districts, municipalities whose budgets were hacked to pieces with the governor’s axe, will have to raise taxes in order to survive, but the governor can claim he didn’t raise taxes. It also means that the energy companies who are developing Pennsylvania’s gigantic marcellus shale natural gas reserves, containing enough energy to meet needs in the US for 50 years, will not have to pay taxes on their profits. That’s usually what Republicans means when they say, “No new taxes”. They mean they will fob off the responsibility for taxes to other entities

    Generally, I’m not opposed to most of the cuts, including those made to higher education. It is long past time for state funds taken from tax payers to stop going to college “professors” who make six figures for sitting in an office doing research and writing books for which they also get paid. Now some of them might actually have to teach classes. But to ask all state employees, teachers, college and university employees, to take a pay cut and ante up more money for their health care, when the governor increases his staff, adds to their salaries, and they pay nothing for their health care. It is elitism, and Governor Corbett has made a huge mistake if he thinks people won’t notice, and that it won’t cost him politically. He’s very likely a lame duck already, bound to one term.

  5. K Gray says:

    Energy companies will not have to pay taxes on their profits? What? Is this unique to Pennsylvania?

    Re top 2%: According to IRS figures fo 2007 (the most recent I could find quickly), the top 1% earners pay over 40% of income tax revenue collected. The bottom 95% of earners pay nearly 40% of revenues collected.

    That was the first year in history that the top 1% paid more taxes than the bottom 95% earners.

    So if there are corporations which are not paying taxes, focus on their loopholes, because our tax code is quite progressive already. And the U.S. effective corporate tax rate — which takes into account exemptions, deferrals, tax credits, and incentives — is about 5th highest in the world, or thereabouts.

    I keep reading that lots of Fortune 500 companies pay no taxes, but I never see proof such as actual IRS figures. ThinkProgress issued a mea culpa last year after mistakenly reporting that Exxon Mobil “paid no income taxes in 2009.” They were wrong and they admitted it.

  6. Anonymous says:

    Those IRS figures only account for projections based on the tax code. And “fairness” isn’t based on the dollar amount and percentage of the revenue generated by the top 2%. Fairness is that the top 2% would have to pay the same percentage of their spendable income in taxes as those in the categories below them must pay. Given the profitability of American business, the income levels of that top 2%, and the size of the profit margins of the country’s largest corporations, the government and the middle class are being robbed blind. The Supreme Court gave them the right to manipulate voters by bypassing accountability for campaign contributions so they can buy ads and infomercials, and pay radio announcers billions to promote their view to elect the congressmen and senators who will do their bidding. It’s why the spendable income of American workers shrank by more than $3,000 a year during the Bush years while corporate profits soared and foreign bank deposits of American businesses soared. It’s why we’re paying health insurance premiums that generate 80% profit margins for insurance companies, and rates for health care that generate an equally high profit margin for hospital corporations. It’s why we pay fourteen times as much for a gallon of gasoline as it costs to produce and deliver it to the pump. It’s why there will be no middle class in America in thirty years, and why unemployment will continue to climb, while jobs are exported to countries where cheap labor can be exploited.

  7. Lee says:

    Let me refocus a bit here. We can talk about the unfairness and exploitive nature of the US tax code (perhaps from a Japanese or European perspective) another time.

    This is about Governor Corbett’s budget. Asking state workers to take pay cuts, limiting collective bargaining (which the courts are likely to overturn), cutting health care benefits and asking workers to ante up more for less, and slashing public education to the bone were all probably necessary steps to save the state budget. But it is what he didn’t do that creates the problem. He didn’t cut his own salary, nor did he turn down his fully paid premium health care coverage. He raised the salaries of the political staffers he hired in his office, essentially his political allies who are being rewarded, an average of $13,000 more than those of his predecessor. He increased the budget of the lieutenant governor (a party hack) by $800,000 and authorized the state to make thousands of dollars in improvements to the lieutenant governor’s mansion, including installation of a swimming pool. But the big money he didn’t cut included almost $400 million in what legislators call “walking around money,” essentially earmarks for pet projects in individual senate and house districts. Nor did he ask the legislators to cut their staffs, free health care or other benefits. About the only perk that he did cut were a few state cars, but hey, with the fat expense accounts, they can just rent them when they need them. So much for getting mileage and being limited to the total amount they can drive, like state employees. He missed an opportunity to tell the voters of the state he and his party are really serious about saving taxpayer dollars, and his political opponents probably won’t let the voters forget that come election time.

  8. K Gray says:

    OK but I really don’t understand your statement that “most of those in the top 2%… pay little or no tax.” That seems empirically untrue.

    Anonymous makes the excellent point that total tax receipts don’t prove that the rich pay their “fair share.” Yet studies of top OCED countries show that in comparison, the U.S. top 10% of earners pay a higher SHARE of total taxes than other OCED countries. That is, the U.S. tax code operates more progressively than other OCED countries by taxing its top 10% (the rich) more heavily.

    The top 1o% U.S. earn 33% of the income and pay 45% of the taxes used to financed our country. That’s a ratio of 1.35.

  9. Lee says:

    An update on Corbett’s budget cuts. Slashing education, failing to reduce welfare, and appropriating expenditures for luxury items for executive branch politicians (some of whom helped him get to Harrisburg in the first place), along with his refusal to take the same kind of salary cut and benefit cut as he is asking state workers to do has probably guaranteed that he’ll be a one term governor. His job approval rating has fallen below 30%.

    There’s a difference between the taxes that wealthy people pay on their income, and that businesses and corporations pay on their profits. Somehow, people have been sold the bill of goods that increasing their taxes just means they’ll get it from us. Not true. Profits are paid to stockholders, and competition keeps the price we pay for goods and services from getting too high. If they pass too much along, their sales drop and so do their profits. Also, if the tax is on the profit margin, the price and sale to the consumer has already been made, and they can’t pass that along.

    The problem is that we get too much of our economic information from radio talk show disc jockeys who are paid millions by corporations and big business to feed us crap.

  10. K Gray says:

    Found an example of your point on profits: An NYT article today highlights how GE has avoided U.S. taxes on its profits — claiming benefits instead — by spending millions on lobbying, e.g., convincing Charles Rangel to kill corporate tax reform effort. But who will oppose GE? — President Obama has picked its CEO Jeff Immelt to head the President’s Council on Jobs and Competitiveness. It’s a depressing story.