HARRISBURG, Pa. — Gov. Tom Wolf criticized a Republican tax-cutting package in Congress, saying Tuesday that it would amount to a tax increase on middle-class Pennsylvanians by ending a state and local tax deduction.
Getting rid of the deduction used by nearly 1.8 million Pennsylvania filers in 2015 — or almost one-third of all filers that year — amounts to the federal government rolling its problems downhill onto state taxpayers, Wolf said.
Wolf, a Democrat, joined Pennsylvania’s Democratic U.S. Sen. Bob Casey in criticizing the provision in a wider $6 trillion plan under construction by House Republicans. Trump administration officials have contended the deduction forces the rest of the country to subsidize homeowners in high-tax, big-spending states.
In response to pushback by some Republicans, the plan’s House Republican architects now say they will keep the deduction for local property taxes. But Wolf said he still sees it as a shift in costs that will force Pennsylvania taxpayers to pay more.
“What we’re talking about here is a shift in costs from the federal government to state taxpayers, and regardless of whether it’s the property tax or an income tax or a local sales tax, the elimination of that deduction means that Pennsylvania taxpayers are going to be paying more,” Wolf said.
House Republican leaders are writing the critical tax legislation in secret with Democratic lawmakers excluded and no hearings planned before formal drafting begins. If the state-local deduction were entirely repealed, it could provide more than $1 trillion over 10 years to help pay for the deep tax cuts under the tax overhaul plan.
According to IRS data from 2015, Pennsylvanians claimed deductions for nearly $20 billion in income, sales and property taxes paid. That was sixth most among states, or an average of about $11,200 for the 6.2 million tax filers that year.
The averages were at least $12,300 or higher in Allegheny County and four suburban Philadelphia counties, Bucks, Chester, Delaware and Montgomery, according to an analysis of the data by the National Association of Counties.
The national average was about $12,500.
Property taxes were $8.2 billion of Pennsylvania’s total claimed that year, with $11.3 billion going to income taxes and $153 million going to sales taxes. Pennsylvania filers claimed an average $7,200 in income taxes paid in 2015, according to IRS data, putting the state in the middle of the pack of states.
Calling the tax plan a giveaway to the wealthy, Casey said 52 percent of Pennsylvania taxpayers claiming the state and local deduction in 2014 made under $100,000 that year.
“This deduction has allowed counties and communities to cover spending on important priorities like education, police, firefighters, transportation, health and other essential services,” Casey said.
The office of Pennsylvania’s Republican U.S. Sen. Pat Toomey said the state and local tax deduction encourages state governments to raise taxes, while overwhelmingly benefiting the wealthiest Americans. Nearly one-third of the total value of the state and local tax deduction benefit goes to Californians and New Yorkers.
“Sen. Toomey does not support subsidizing big-spending, tax-hiking state and local politicians,” Toomey’s office said. “He is working on a tax reform that will directly lower taxes on middle-income, hardworking Pennsylvania families and will not encourage other politicians to offset those savings with another tax hike.”