The Tom Wolf income tax plan – Part 3: Legislative and legal hurdles


Part three in a series exploring the issue of taxes in the 2014 Pennsylvania gubernatorial race. Read part one here. Read part two here.

By Eric Boehm | PA Independent

Pennsylvania voters will go to the polls Nov. 4 and may very well choose Tom Wolf, a York County businessman, to be their next governor.

A MAN WITH A PLAN: Tom Wolf, left, the Democratic candidate for governor in Pennsylvania, says the state’s richest residents should pay a higher share of the state’s education costs. He wants to implement a more progressive tax system to shift the burden away from property taxes.

Whether they do so because of, or in spite of, Wolf’s plan to revamp the state’s income tax system to make wealthy Pennsylvanians pay more, the election will not settle the issue.

Before a major rewrite of the state’s tax code can happen, Wolf and his supporters will have three major hurdles to clear.

The first is the election itself. That’s also probably the easiest: Wolf leads Gov. Tom Corbett, the Republican incumbent, by double digits in most polls of the race, although a few recent surveys have shown Corbett closing the gap a bit.

The other two will prove harder to surmount. Both chambers of the state General Assembly are controlled by Republicans who will view a progressive income tax proposal with skepticism, at best, and downright hostility at worst. Even if Wolf can find a way to navigate those seas, the state constitution might block his proposal from even becoming law — likely with an assist from the state Supreme Court.

Here’s a closer look at those two obstacles.

  1. Republicans in the General Assembly

Republicans head into the general election with a majority in both chambers of the General Assembly.

THE GENERAL ASSEMBLY: Controlled by Republicans, and likely skeptical to the prospect of raising the state income tax. Then again, the last time the tax was hiked, the GOP ran the show.

Control of the state Senate is in play, but only barely. The Republicans hold a 27-23 edge currently, but only half of the Senate districts will have elections this year.

Of those, 15 are held by Republicans and 10 by Democrats. To grab an outright majority, Democrats would have to successfully defend all their seats and flip three GOP seats (if they gain two seats and the governorship, the new lieutenant governor could break a 25-25 tie on most legislative procedures, but — importantly — cannot vote on the final passage of legislation).

Even if Democrats can ride Wolf’s coattails in the state Senate, Republicans’ 111-92 majority in the state House is practically unassailable. It’s one of the largest majorities in state political history, and thanks to a GOP-friendly redistricting in 2011 it’s nearly inconceivable to think Democrats will have a majority when the new session begins in January.

“It’s hard to imagine a very conservative state House adopting even a modest increase to the income tax — much less the kind of increase Wolf is talking about,” said Terry Madonna, a pollster and professor of political science at Franklin and Marshall College.

Here’s the upshot for Wolf: The last time Pennsylvania increased the income tax was in 2003, when a Democratic governor got the bill through a Republican-controlled state House and Senate.

But Republicans in Harrisburg today, particularly many of the members of the House, are a more fiscally conservative bunch than the group that ran the show 10 years ago. There are many new members elected in the wake of the 2005 pay raise and during the “tea party” wave election in 2010. They are unlikely to look favorably upon an income tax increase.

The General Assembly is more polarized and the House is more conservative than it was in 2003, Madonna says.

“We’re not even close,” said Steve Miskin, spokesman for House Majority Leader Mike Turzai, R-Allegheny, when asked about the possibility of the GOP majority bringing a tax increase proposal to the floor.

That being said, if a bill does somehow make it to the floor of the House, it could pass with unanimous support from minority Democrats and a handful of moderate Republicans. Stranger things have happened during budget battles.

  1. The Pennsylvania Constitution’s “Uniformity Clause”

Let’s assume Wolf is able to get elected and push all the right buttons to get his income tax plan through the General Assembly. He might run into a legal problem with Article VIII Section 1 of the Pennsylvania Constitution.

It states: “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.”

Judges have interpreted this to mean that all taxes in Pennsylvania must be levied equally on all residents. That’s why the state has a flat income tax rate of 3.07 percent, because a progressive tax with different rates for different income brackets would be unconstitutional.

The Pennsylvania Bar Association notes other state constitutions have similar language, but the Pennsylvania Supreme Court is the only state high court to interpret the language in this way.

Wolf’s campaign says that won’t be a problem. He’d keep a uniform rate — though, as we explored on Wednesday, he can’t say what that rate would be — and then exempt a portion of every individual’s income from the tax. The result would be a flat tax rate that essentially operates like a progressive tax with two brackets.

“(Wolf’s) proposal, that calls for a single rate and a single exemption for all taxpayers regardless of income level, is constitutional,” said Beth Melena, spokeswoman for the Wolf campaign.

But University of Delaware professor Sheldon Pollack told John Baer of the Philadelphia Daily News that Wolf’s plan “is not uniform” because currently every earned dollar is taxed at 3.07 percent and under Wolf’s exemptions not every dollar would be.

If Wolf’s plan made it through the General Assembly, the state Supreme Court would likely get the final word in this hypothetical.

But, hey, you can’t say Wolf isn’t being ambitious.

Coming Monday, part four in our series on taxes and the gubernatorial election: a look at Gov. Tom Corbett’s record.