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“Please No More Taxes” Coalition Corrects Budget Secretary Masch on Tax Cuts

Evidence Suggests Pennsylvania Can “Tax Cut Itself to Prosperity”

HARRISBURG – Today, members of the “Please No More Taxes” Coalition corrected Pennsylvania Budget Secretary Michael Masch on his erroneous claims about the economic benefits of reducing the tax burden on Pennsylvanians.

At the monthly Press Club luncheon in Harrisburg, Gov. Rendell’s right-hand man on state budget issues commented on the PleaseNoMoreTaxes.org billboard that he sees every morning on his way to work.  But while Secretary Masch acknowledged that “Pennsylvania can’t tax itself to prosperity,” he inaccurately stated that “Pennsylvania can’t tax cut itself to prosperity either.”

The group noted that historical evidence demonstrates that reducing taxes—not increasing them as proposed by Gov. Rendell—would be the best way to stimulate Pennsylvania’s economy.

“The simple truth is that you CAN tax cut your way to prosperity,” said coalition member and NFIB state director Kevin Shivers.  “For every bit of tax relief given to small firms, business owners can create more jobs, purchase healthcare for employees, raise workers’ salaries, invest in new equipment, and bring new products to market.”

Commonwealth Foundation president Matthew Brouillette noted that both the Kennedy tax cuts of the 1960s and the Reagan tax cuts of the 1980s spurred sustained, well-documented economic growth.

President Kennedy said, “an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget, just as it will never produce enough jobs or enough profits.”  Kennedy’s 1962-63 tax cuts were dramatically positive for both the national economy and the federal treasury.  Between 1961 and 1968, inflation-adjusted economic growth rose 42 percent—or more than 5 percent annually—and inflation-adjusted tax revenues increased by one-third.

President Reagan’s 1981-83 tax cuts stimulated a 17-year economic expansion, interrupted only by an eight-month downturn in 1990-91.  During this period, the national economy grew at an average annual rate of 3.6 percent—more than double the 1.6 percent annual growth rate of the preceding ten years—and created 35 million new jobs.

“The reality is that reducing the tax burden on Pennsylvanians—not increasing it—is the necessary prescription for improving Pennsylvania’s economic health,” said Brouillette.

“If Pennsylvania plans to continue to rely on small business to provide family-sustaining jobs, policymakers must recognize the devastating impact of massive increases in state spending and taxes on job creators and investment,” said Shivers.  “The current economic slump has forced small business owners and working families to trim their budgets.  It’s time for state government to do the same.”

Shivers noted that unemployment is at its highest level in a decade and small business owners and workers are grappling with healthcare costs that are spiraling out of control.  He said that burdening small businesses and workers with higher taxes now adds even more strain.

“We hope Secretary Masch and Governor Rendell will look at the historical record and recognize the stimulating effect of reducing the tax burden on families and job creators,” concluded Brouillette. 

“The current proposals to increase taxes by more than $3.2 billion will severely hinder Pennsylvania’s economic competitiveness.  We already have the highest combined business taxes in the nation and the 20^th highest personal income tax in the country,” he said.  “Adding to that burden is economic foolishness.”

PleaseNoMoreTaxes.org is project of The Commonwealth Foundation designed to help educate the public about the destructive impact of higher taxes on families, job creators, and the economy.  The foundation is encouraging citizens to visit its website through billboards and bumper stickers across the commonwealth.  In his Press Club comments, Secretary Masch referred to the Capitol-area billboard which reads: “PleaseNoMoreTaxes.org ... because Pennsylvania can’t tax itself to prosperity.”  For a photo of the billboard, go to www.PleaseNoMoreTaxes.org/Billboard.shtml.

# # #

PleaseNoMoreTaxes.org is a project ofThe Commonwealth Foundation, a free-market public policy research and educational institute in Harrisburg, PA.   For more information, visit www.CommonwealthFoundation.org and www.PleaseNoMoreTaxes.org.

The Pennsylvania chapter of the National Federation of Independent Business is Pennsylvania’s largest small-business association.  According to the state Department of Labor, 98 percent of all Pennsylvania businesses employ fewer than 100 workers.  These businesses account for 52 percent of all jobs in the state.  For more information, visit www.NFIB.com/PA.

CONTACT:

Matthew J. Brouillette, The Commonwealth Foundation, 717.671.1901

Kevin Shivers, National Federation of Independent Business, 717.232.8582

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