Dear Rep. LaGrotta:

 

Thank you for your email.  I would be happy to discuss with you any inaccuracies in our analyses, particularly this one of Gov. Rendell’s Plan for a New Pennsylvania.  If you are interested, I would be happy to meet with you in your office at your convenience.  And since you copied the Governor’s office as well, I invite them to join us for our discussion.

 

My office number 717.671.1901.  I look forward to hearing from you.

 

Regards,

 

Matt

 

 

Matthew J. Brouillette, President

The Commonwealth Foundation

225 State Street, Suite 302

Harrisburg, Pennsylvania 17101

717.671.1901 phone

717.671.1905 fax

Info@CommonwealthFoundation.org

www.CommonwealthFoundation.org

 

 

 

-----Original Message-----
From: LaGrotta, Frank [mailto:FLaGrott@pahouse.net]
Sent: Wednesday, June 25, 2003 11:56 AM
To: Matthew Brouillette
Cc: nreichl@state.pa.us
Subject: RE: NEWS RELEASE: Correcting Gov. Rendell's "Truths" on the "Plan for a New Pennsylvania" (June 25, 2003)
Importance: High

 

Do me a favor.

 

If you, and other right wing front groups like you, want to keep protecting rich people, while lying to working people, stop sending me your crap. Send it to the GOP “truth squad,” (or is that death squad) that funds groups like yours.

 

 

Rep. LaGrotta

 

-----Original Message-----
From: Matthew Brouillette [mailto:brouillette@commonwealthfoundation.org]
Sent: Wednesday, June 25, 2003 11:24 AM
To: The Commonwealth Foundation
Cc: The Commonwealth Foundation
Subject: NEWS RELEASE: Correcting Gov. Rendell's "Truths" on the "Plan for a New Pennsylvania" (June 25, 2003)
Importance: High

 

NEWS RELEASE from The Commonwealth Foundation

 

Correcting Gov. Rendell’s “Truths” on the “Plan for a New Pennsylvania”

 

HARRISBURG—Gov. Rendell held multiple news conferences to counter the “misinformation” contained in automated phone calls going out across the Commonwealth criticizing his tax-borrow-and-spend “Plan for a New Pennsylvania.”  Charging that the calls “represent the dirtiest of political tricks,” Gov. Rendell issued a point-by-point comparison of “The Script” and “The Truth.”  Unfortunately, Gov. Rendell’s version of “The Truth” needs a corrective dose of “Reality,” which is provided below by The Commonwealth Foundation.

 

The Script [according to the automated telephone calls]: “The Rendell tax plan asks you and your family to pay nearly $3.2 billion more in state taxes for a series of new state programs that will benefit a small portion of schools across the state.”

 

The [Rendell] Truth: The script exaggerates the tax impact on Pennsylvania’s families by 300%.  New tax revenues total $2.9 billion of which $1.5 billion are returned to taxpayers by lowering their property tax bills.  Under the Rendell plan not all the new revenue is from taxes; $300 million will come from slots.  The overall tax burden to businesses and individuals increases by $1.1 billion.  Taxes on personal income are increased by less than 1% to fund $1.5 billion in property tax reductions, improve our schools and balance the state budget.  Every school district benefits from the increase in the basic education subsidy, and funds for full-day kindergarten, tutoring and class size reduction.

 

The Reality [from The Commonwealth Foundation]: While the Rendell Plan, if enacted as proposed, guarantees that state taxes will go up by $3.2 billion (the $300 million raised from slot machines is a new tax on the revenues generated by those machines), there is no guarantee that any permanent property tax relief will result, especially given the Governor’s lack of support for taxpayer protections (such as a requirement that voters approve any future school district property tax increases).  In addition, analyses of the Rendell Plan’s district-by-district impact have shown that taxpayers in more than 75 percent of Pennsylvania’s school districts will collectively pay more in increased state taxes than they would receive in property tax “relief.”  Even with a $1.5 billion rebate for some Pennsylvanians, the majority of working Pennsylvanians will pay more.

 

Furthermore, the Rendell Plan raises the state personal income tax from 2.8 percent to 3.75 percent—a 34% hike, not the “less than 1%” claimed by the Governor.  For example, a taxpayer earning $50,000 currently pays $1,400 in state personal income taxes.  Under the Rendell Plan, that taxpayer would pay $1,875—an increase of $475, or 34 percent more than previously paid.

 

 

The Script: “The final cost of the Rendell tax package wipes out nearly all of the state tax relief delivered to Pennsylvania’s families over the past decade.”

 

The [Rendell] Truth: Pennsylvania’s families did not receive any substantial tax relief in the last decade; businesses did.  In the last ten years, property tax payers were given one-time, $100 reduction in 2000.  In that same period, as a result of the relatively flat state funding for schools, property taxes increased by 56.4%.  Through the Rendell Plan, $1.5 billion will be used to reduce property taxes by an average of 30% statewide this year.  This Plan is not just a one-time reduction; it will keep school property taxes down for years to come.

 

The Reality: Gov. Rendell is ignorant of a fundamental principle of taxation: Businesses don’t pay taxes; rather, individuals do.  Businesses simply pass the costs of taxes on to workers and consumers through price increases, as well as through wage, benefit and employment reductions.  While Pennsylvania’s recent business tax cuts were not large enough to lift the Commonwealth out of its economic doldrums (and business taxes in PA are still among the highest in the nation), they did reduce the burden that would have otherwise been faced by all taxpayers.  Conversely, Gov. Rendell’s Plan is estimated to extract an additional $8.65 billion from Pennsylvania businesses over the next eight years—an increased tax burden that will surely be passed along to the state’s remaining workers and consumers.

 

Gov. Rendell is correct that state politicians did not give Pennsylvania’s families “any substantial tax relief in the last decade.”  However, neither were they strapped with a 34 percent, $2.2 billion personal income tax increase during the last decade.

 

With regard to state funding of schools, local property taxes have not increased due to a lack of support from the Commonwealth.  The reality is that state funding to public schools consistently and substantially increased during the past three decades.  The problem is a lack of fiscal discipline by local school boards, which have shown a willingness to “tax out” local homeowners instead of saying “no” to unreasonable demands for more spending by teacher unions and other members of the “education establishment.” 

 

Finally, the claim that “This Plan is not just a one-time reduction; it will keep school property taxes down for years to come” is wholly inaccurate.  As previously noted, there is nothing in the Rendell Plan that prevents local school boards from increasing property taxes today, tomorrow, or at any time in the future.

 

 

The Script: “If enacted the increase could force local schools to actually increase your local property taxes to cover additional education expenses.”

 

The [Rendell] Truth: The Rendell Plan will NOT require any additional local tax increases.  Every school district will receive new funding under the $1.3 billion Rendell educational improvement plan, including a 2.5% increase for general operations and large grants to provide full-day kindergarten, smaller class sizes in lower grades and tutoring.  Districts where more than a third of the students are poor will also receive funds to offer pre-k, and improved training/support for their teachers.  Every district gets state funds for dollar-for-dollar property tax reduction ranging from 15-60%; on average a 30% reduction.  Schools districts can choose to take advantage of these funds and none of the state funds require districts to increase their local taxes.

 

The Reality: Of course the Rendell Plan does not “require” any local tax increases—local school boards are more than happy to increase them voluntarily.  However, the Rendell education plan’s prominent features—full-day kindergarten, reduced class sizes and tutoring—will very likely require additional local taxes for the construction of additional classrooms, employee salaries, health benefits, pensions, and other additional costs not fully factored into the Rendell calculations.  And, once again, the fact that the Rendell Plan fails to control local school tax increases, adjust property millage rates, or address the property assessment issue means local taxes can rise as fast or faster than they have risen over the past 30 years.

 

 # # #

 

The Commonwealth Foundation is a free-market public policy research and educational institute based in Harrisburg, Pa.  For more information on Gov. Rendell’s tax-borrow-and-spend “Plan for a New Pennsylvania,” visit www.PleaseNoMoreTaxes.org or www.CommonwealthFoundation.org.

 

CONTACT: Matthew J. Brouillette, 717.671.1901

 

- 30 -