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PA-Gov: McGinty Unveils Plan for Income Tax Cuts

McGinty
McGinty

Former DEP Secretary and now-gubernatorial candidate Katie McGinty is proposing a drastic change to income tax benefits and the requirements needed to qualify for them.

McGinty’s proposal, released earlier today, would increase income tax thresholds and thus extend benefits to more low-income workers and families. The proposal is estimated to extend benefits to 200,000 new Pennsylvania residents.

“My plan will cut taxes to help Pennsylvanians who work hard to support their families,” McGinty said. “Combined with my proposal to increase the minimum wage, we can increase incomes, give Pennsylvanians more spending power to generate economic growth and jobs, and help hardworking families break out of poverty.”

Under her proposal, the threshold for single individuals who are exempted from income taxes would increase from $6,500 a year to $10,000. Likewise, the threshold for those who are married would increase from $13,000 to $16,000; single parents with two children would see an increase from $24,500 to $34,000; and married couples with two children would see an increase from $32,000 to $38,000 in order to be exempt from state income taxes.

For every $500 earned above McGinty’s proposed levels, the income tax would decrease by 10%.

The current special tax exemptions were created in 2004 and have not been adjusted for inflation.

“It’s simple — if you work hard and play by the rules, you should be able to provide for yourself and raise a family in Pennsylvania,” said McGinty. “My plan raises the exemption by more than 20 percent and provides real help to hard-working families.”

The proposal is estimated to cost between $60 million to $70 million, but McGinty believes that those costs will be offset by the increase in the revenue brought in by sales tax.

“By putting more money into the pockets of consumers through a raised minimum wage and a targeted tax cut, they will be able to buy more, which will increase sales tax revenue,” she said. “It’s a win for hardworking Pennsylvanians and a win for generating economic growth and jobs.”

Under the proposed tax cuts, a single mother with two kids who earns $27,750 would receive a tax refund of $852; under the current system, she would only receive $85 in refunds.

McGinty had a solid performance at the Democratic candidates forum last night, but she faces a wide field of primary opponents. Also running are State Treasurer Rob McCord, Rep. Allyson Schwartz (D-Montgomery), former Revenue Secretary Tom Wolf, DEP Secretary John Hanger, Allentown Mayor Ed Pawlowski, Lebanon County Commissioner Jo Ellen Litz and minister Max Myers.

2 Responses

  1. Mr. Patti would be right except for one minor point. The Poverty Tax Exemption has been law in Pennsylvania since 1974. The caps have been raised 5 times, during the administrations of Bob Casey, Tom Ridge and Ed Rendell. McGinty’s proposal raises the income limits. The steps that she is proposed to change are already in law. So if Mr. Patti’s (and the rest of the business community) only concern is whether this idea is constituional, it is current law and presumably a law that they support.

  2. The devil is in the details and to be fair it would be nice to read Ms. McGinty’s actual proposal. But from this reporting, to transform our tax code to one in which “For every $500 earned above McGinty’s proposed levels, the income tax would increase by 10%” sounds like the adoption of a progressive tax replacing Pennsylvania’s current flat rate personal income tax. A progressive PIT is expressly forbidden by the Pennsylvania Supreme Court’s interpretation of Article VIII, Section 1 of the Pennsylvania Constitution – known as the Uniformity Clause. It would require a Constitutional Amendment, the likelihood of which is very low, to enact her proposal.

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