Pennsylvania Governor proposes plan to cut taxes for working class families
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Topics: PENNSYLVANIA
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The governor's plan would make Pennsylvania's tax structure more fair and equitable, cutting taxes for working class families while still making historic investments in public education through the fair funding formula.
“We will defeat COVID, but we can’t yet say when it will be safe for life to return to normal – and it’s hard to know what ‘normal’ will even look like. But I refuse to tell any young family in Pennsylvania that they just happen to be starting out at the wrong time – that, with everything going on, 2021 just isn’t going to be the year we get around to lifting the barriers that stand between them and the future they hope to provide for their children,†Gov. Wolf said.
“I think it’s more important than ever that we act boldly and courageously to remove those barriers once and for all. So, today, I’m proposing a budget designed to do exactly that.â€
Pennsylvania's tax system is one of the most unfair and regressive in the country, and it hurts working people. Working class and low-income families pay exactly the same rate as the most well-off in our commonwealth.
The COVID-19 pandemic has only exposed the inherent unfairness and inequity in our system with the most vulnerable Pennsylvanians bearing the brunt of the pandemic while many of the wealthiest became even more prosperous.
Under the governor’s proposal, not only will the commonwealth invest billions of dollars in education through the fair funding formula, Pennsylvania working class families will also receive a historic tax cut.
Under the governor's proposal, the special tax forgiveness credit will be expanded, and working class families will have their taxes reduced or eliminated completely.
Overall, 67 percent of Pennsylvanians will either get a tax cut or see their taxes stay the same. The proposal increases the allowances for tax forgiveness to $15,000 for single filers, $30,000 for married filers, and $10,000 allowance for each dependent.
Filers with incomes at or below these thresholds will receive 100 percent tax forgiveness. The percentage of tax forgiveness declines by 1 percentage point for each $500 above the threshold for 100 percent forgiveness.
For example, this means that families with two children making less than $84,000 will receive a tax cut while a family of four making $50,000 will have their taxes eliminated.
The governor is proposing a more than $1.3 billion investment in basic education funding. This investment directs all existing state-level basic education funding through the Fair Funding Formula and includes an $1.15 billion adjustment so that no school district is negatively affected.
An additional $200 million investment in basic education funding is proposed to allow all districts to continue to invest in student achievement. This investment enables all school districts to have the basic resources they need to provide a high-quality education for Pennsylvania students.
The fair funding formula directs state money to school districts based on many factors including student enrollment and needs, and the ability of their community to fund local schools.
The fair funding formula only applies to increased funding since 2016. Putting all state funding through the formula will ensure students in every community have the funding to succeed.
In order to support child care access and affordability for low-income working families, the administration is increasing payment rates for subsidized child care to keep pace with rates for private-pay families and ensure equal access to child care for all Pennsylvanians as of March 2021.
The governor’s plan includes $87.17 million in additional federal funds to support these increased Child Care Works base rates and create a more stable business environment for child care facilities while improving equal access to child care services.
In addition to the increase in Basic Education Funding, there is a $200 million increase in the Special Education Funding Formula. The increase in special education funding ensures school districts have the basic resources they need to provide high-quality special education services to students with disabilities and special needs.
The governor is proposing $25 million for Pre-K Counts and $5 million for the Head Start Supplemental Program. This new funding will allow approximately 3,270 additional children to enroll in the state’s high-quality early learning programs.
The governor is proposing a $199 million plan to develop the Nellie Bly Tuition Program by repurposing existing dollars that are right now flowing into the Horse Racing Development Fund.
The program will provide financial assistance to full-time students enrolled in the PASSHE system, with priority given to students pursuing careers in education. In exchange, students agree to stay in Pennsylvania after graduation for the same number of years for which they receive financial assistance through the program.
Many students, even those receiving needs-based financial aid or other financial assistance still have gaps between the total cost of a college education and what financial aid will cover. This needs-based tuition will fill that gap to help students cover the real costs of college, including room and board, books, supplies, and graduation expenses.
The Nellie Bly Tuition Program converts to a loan if the student moves out of the commonwealth during the commitment period and can be deferred while the student pursues further education.
Pennsylvania arbitrarily sets minimum compensation for Pennsylvania teachers and other education professionals, including counselors and school nurses, at a 1980s-level of $18,500 per year, or $8.90 per hour.
This salary is outdated and is not based on the real work education professionals perform in today’s classrooms. It assumes a 40-hour workweek, even though most educators spend many hours out of the classroom preparing lesson plans and reviewing student assignments. The current statutory minimum salary fails teachers, students, and families.
The governor is proposing to increase the minimum salary to $45,000 per year.
The governor is proposing to increase the state minimum wage to $12 per hour effective July 1, 2021, with annual increases of $0.50 until the minimum wage reaches $15 per hour on July 1, 2027. ■