Pennsylvania House Pushes Tax Increases Over Weekend

October 6, 2009

Pennsylvania is slightly closer to having a budget, although the bill that finally emerges is unlikely to be cause for celebration. Their House over the weekend approved lots of tax changes, including increased taxes on tobacco products, a natural gas severance tax, a tax amnesty for 2009-10, and the exemption of helicopters and helicopter parts from the sales tax-promised to create 300 new jobs. As well as:

The roughly $28 billion spending plan increases education spending by $300 million over last year and sustains spending on other state programs important to the governor and his allies in the General Assembly. It also broadens the state sales tax to cover arts and culture events. Also, to the chagrin of anti-tax economic experts, it also slows down the phase-out of the state’s punitive capital stock and franchise tax.

States are increasingly repealing capital stock and franchise taxes because such taxes on corporate “wealth” target capital formation and investment even if a company is unprofitable, and at a time when most states are trying to encourage capital formation and investment.

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A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.