June 17th, 2009

Yesterday, Gov. Rendell called for a “temporary” half percent hike in the state’s personal income tax, which drew criticism and anger from Republicans and fiscal conservatives, reports the Pittsburgh Post-Gazette.

This moves the budget battle to a new level, as Sen. Republican Leader Dominic Pileggi stated that he doubts a single member of his caucus would vote for a tax increase, dooming the plan.  Meanwhile House Minority Leader Sam Smith said he doubts any of the Republican members of the house would support the hike either, while he is projecting at least 20-30 fiscally conservative House Democrats will not vote for it either.

“An income tax increase is just wrong,” said Rep. Mike Turzai, R-Bradford Woods. “This guy needs a reality check. Families are facing difficult situations. They can’t afford more taxes. The governor just wants to spend more money on his bloated programs.”

Legislators said that while a deal on a 2009-10 budget is probably impossible by the June 30 deadline, this new element makes things even more difficult.

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Kevin Shivers of the National Federation of Independent Business said a higher income tax would hurt many small businesses, which pay their state taxes under the PIT rate, not the corporate tax rate. He said it could cause firms to shave as many as 24,000 jobs.

Two House Democratic leaders did support a 3.57 percent income tax rate.

“The national economy continues to decrease our revenues,” said House Majority Leader Todd Eachus of Luzerne, noting that the budget deficit has jumped to $3.2 billion, versus $2.3 billion in February, when Mr. Rendell proposed his $29 billion budget.

“I will support a higher income tax because of our eroding fiscal situation,” he said. “But if we need more taxes, we also need more spending cuts.”

The Philadelphia Inquirer and The Patriot-News also reported on the proposed hike.