Pennsylvania
ITEP’s Kamolika Das Testifies on Pennsylvania’s Upside-Down Tax Code
Below is written testimony delivered by ITEP Local Policy Director Kamolika Das before the Pennsylvania House Finance Subcommittee on Tax Modernization & Reform on March 1, 2024.
Good afternoon and thank you for this opportunity to testify. My name is Kamolika Das, I live in South Philly, and I’m the Local Tax Policy Director at the Institute on Taxation and Economic Policy or ITEP. ITEP is a non-profit, non-partisan tax policy organization. ITEP recently updated our flagship report, Who Pays?, which analyzes the distribution of state and local taxes across the income scale in all 50 states and D.C. This is the 7th edition of the study and the most thorough version yet. It covers 99.7% of all state and local taxes, including the most minute taxes like Pennsylvania’s fireworks tax and dry-cleaning tax.
Our research finds that across the US, low- and middle-income families pay higher tax rates than the wealthy on state and local taxes. Nationwide households making under $24,000 a year pay 11 percent of their income on state and local taxes while the top 1%, households making over $730,000 a year, pay 7 percent.
Definitions of what constitutes tax equity or tax justice differ. Some people argue for flat taxes, where everyone pays the same portion of their income on taxes. Of course, this leaves lower-income people with far less income after paying for basic necessities. Others believe the rich should pay more because they have a higher ability to pay and because they owe some of their good fortune to the public services and social stability that government provides. Regardless of your definition, most tax systems, including Pennsylvania’s, are not fair or equitable. In fact, Pennsylvania’s regressivity far exceeds that of the national average. In Pennsylvania, the lowest 20 percent of earners pay an effective tax rate 2.5x higher as a share of income than the top 1 percent. So Pennsylvania ranks the 4th most regressive tax system in the nation according to ITEP’’s Tax Inequality Index.
A common thread that we’ve identified in regressive tax systems is that state and local governments are heavily reliant upon regressive taxes on what people buy, or on their homes that they own or rent. Sales taxes inevitably require a larger share of income from low- and middle-income families than from wealthier families because sales taxes are levied at a flat rate and spending as a share of income falls as income rises. Since high earners can save a much larger share of their incomes than middle-income families—and since the poor can rarely save at all—the tax is inherently regressive. Same with housing since home values as a share of income tend to decline at higher incomes.
Often, when people think about state and local taxes, they solely focus on income taxes, but income taxes do not exist in isolation. This leads to the deep misconception that flat income taxes result in an overall flat tax structure. But in reality, given the fact that sales taxes and property taxes are both regressive, states need offsetting structures like graduated income tax rates to create an overall flat structure and satisfy the minimum standard of tax fairness.
Many states that are commonly perceived as “low tax” are often high tax for low-income families. ITEP analyzed flat tax states and graduated income tax states empirically and on average, low- and middle-income households pay lower rates in graduated income tax states. This is commonsense since flat tax states are not raising as much from the wealthy so they have to rely more heavily on everyone else. For example, households making $30,000 to $80,000 actually pay higher effective tax rates on all state and local taxes in Pennsylvania than they do in New Jersey.
Pennsylvania’s regressive taxes also makes it more difficult to invest in shared priorities like addressing the state’s inexcusable education opportunity gaps. Progressive taxation is positively correlated with higher overall tax revenue levels relative to the size of each state’s economy; taxing high-income families at lower rates will inevitably constrain revenue collections. While Pennsylvania’s wealthiest residents grew their collective wealth during the pandemic, the percent of families who are unable to afford the basics of housing, childcare, food, transportation, health care, and technology grew by 2 percentage points.
Tax policy is one tool to help reduce this inequality. If you look at the jurisdictions with the least regressive state and local tax systems (DC, Minnesota, Vermont, New York, New Jersey, Maine, and California) there are several common factors: graduated marginal income tax rates; targeted, refundable low-income credits; broad-based income taxes with limits on tax preferences for upper-income taxpayers; a higher reliance on taxes that take ability to pay into account; and a lower reliance on taxes on consumption.
Several states have made strides in lessening tax regressivity in the past few years.
New Mexico advanced 18 spots in our latest edition of Who Pays? by enacting a new state Child Tax Credit, a larger Earned Income Tax Credit for low-wage workers, a cut to the Gross Receipts Tax rate charged on the things New Mexicans buy every day, and a higher top income tax rate on the state’s wealthiest families. Washington state is no longer the single most regressive tax jurisdiction due to their recent enactment of a new tax on capital gains and the creation of a tax credit, similar to an EITC, for low- and moderate-income families. And Massachusetts voters dismantled their flat tax in November 2022 by adopting a constitutional amendment to impose a surtax on millionaires.
These decisions also have dramatic impacts on education funding. Massachusetts’ Fair Share Amendment is expected to raise more than $2 billion in revenue each year for public education and transportation infrastructure. This benefits the public, of course, but this is also a pro-business move since inadequate education and infrastructure revenues hurt economic growth. And just as a reminder, Pennsylvania policymakers in 2022 chose to cut the corporate income tax rate in half over eight years, with the cut not taking full effect until 2031. As a result, the cost will balloon from $127 million in 2023 to nearly $1.5 billion in 2031.
I realize that flat rate tax structures are enshrined in the state constitutions of Pennsylvania, Colorado, Illinois, and Michigan, therefore limiting the shovel-ready policy options available to this set of states. However, even within those limitations, lawmakers can take immediate steps to reduce the regressivity of Pennsylvania’s state and local tax system. Thank you and I’m happy to answer any questions.
Pennsylvania
Pennsylvania lawmakers debate immigration crackdowns after Minneapolis shooting
(WHTM) — Days after federal agents killed a U.S. citizen in Minneapolis, Pennsylvania State Sen. Tim Kearney (D-Delaware) stood outside an office for one of the Keystone State’s most prominent Democrats, arguing he’s not doing enough.
“It’s going to take people in the street really trying to make a difference, which is one of the reasons that I’m here today,” Kearney said Wednesday while protesting outside U.S. Sen. John Fetterman’s Philadelphia office. Fetterman did release a statement earlier in the day calling for President Donald Trump to fire Homeland Security Secretary Kristi Noem.
But State House and Senate Democrats have been pushing for several proposals that would limit what Immigration and Customs Enforcement agents can do in the state. One would ban them from wearing masks, another prohibits them from making arrests on state property, court houses, and schools, while a third would let residents sue the federal government if they violate constitutional rights.
“I would hope that my colleagues across the aisle would join us in calling for accountability and calling for common sense standards for these ICE operations that have clearly gone way out of hand,” said State Rep. Tarik Khan (D-Philadelphia).
Republicans in Harrisburg and Washington mostly reject such initiatives, and Abigail Jackson, a White House spokeswoman, pushed back against the measures in a statement.
“ICE officers are facing a 1300% increase in assaults because of dangerous, untrue smears by elected Democrats,” she said. “Just the other day, an officer had his finger bitten off by a [radical] left-wing rioter. ICE officers act heroically to enforce the law and protect American communities, and local officials should work with them, not against them. Anyone pointing the finger at law enforcement officers instead of the criminals is simply doing the bidding of criminal illegal aliens.”
State Senate Majority Leader Joe Pittman said safety is a top priority for the Senate Republican Caucus.
“Under the tenure of the Biden Administration, state and local officials across this country sounded the alarm regarding the straining of their resources, the scourge of fentanyl deaths, the tragedy of human trafficking, including children smuggled across the border, and the flow of illegal firearms and dangerous gang members,” he said in a statement. “Collaboration between state and federal government is critical as we work to recover from the disastrous border policies of the Biden Administration and seek to protect lawful citizens.”
Meanwhile, Kearny warned Republicans that insisting on resisting bills to rein in ICE may face voters in November.
“If this stuff doesn’t move, which it hasn’t moved so far, then that’s something we can campaign on,” he said.
Pennsylvania
Western Pa. wine, cheesemakers take top honors at 2026 PA Farm Show
Couples planning for Valentine’s Day could have themselves quite a fancy evening dining solely on some local wine and cheese, which has been judged among the best in Pennsylvania.
Western Pennsylvania wine and cheesemakers once again came home with a good deal of accolades from the annual Pennsylvania Farm Show, held this month in Harrisburg.
“I brought eight wines, and they all ended up with medals,” said a happy Frank Mazzotta, owner of Mazzotta Winery in Richland.
Mazzotta’s boutique winery has made regular, multiple appearances on the farm show’s awards list the past few years.
“We do it the old-fashioned way, taking fruit, fermenting it and making it into wine,” he said. “There’s no additives, no flavor enhancers. It tastes like what it’s supposed to taste like — juice that’s alcoholic.”
Mazzotta’s 2024 peach wine earned not just a silver medal but a “best fruit wine” designation. He also brought home two silver and five bronze medals.
Just a few miles northeast of Mazzotta, La Vigneta Winery owner Francesca Howden is celebrating another good year at the farm show. Her wines came home with four silver medals and a bronze.
“We definitely take the competition very seriously,” she said. “My team works really hard to make sure our wines are produced to the highest standard.”
And if you’d care for some cheese to pair with those wines?
Look no further than Indiana Township’s Goat Rodeo Farm & Dairy, whose Wild Rosemary took the silver medal in the best of show category. It also earned a first-place finish in the mixed milk category, and the farm’s Cowboy Coffee cheese took third place in the same category. Finally, Goat Rodeo’s chevre cheese took first place in the goat’s milk category.
Mazzotta and Howden said they use feedback from the show in a variety of ways.
“We use those results to determine how much of these wines we want to produce,” Mazzotta said. “We use the awards to know which ones people will like when we go to an off-premise sale. It’s kind of guidance for a winemaker in terms of how much to make.”
Howden said La Vigneta also makes some of its plans for the coming year based on feedback from the farm show.
“For example, when we won the Governor’s Cup in 2023 for our blush, that let us know we needed to produce more of that particular wine,” she said. “But we also get feedback throughout the year on what customers like and what’s popular. That really helps us tweak and refine our wines. The farm show just validates a lot of that and shows whether you’ve produced wine that the public likes and the judges can recognize.”
Howden said she also uses the results to do some research.
“I want to see and taste the wine that won this year’s Governor’s Cup,” she said. “We look at the awards other wineries win, taste each other’s wines and that’s helpful as well, to see what struck the judges’ interest this year.”
Brewers
Western Pennsylvania beer breweries had some stiff competition from their counterparts out east, but Vandergrift-based Allusion Brewing Company, which also has a taproom in Hampton, brought home three third-place finishes.
“We brought back ribbons for our Baker Street Brown Ale, a London-style brown, our Abby Normal, a Munich-style dunkel, and our Christmas ale called Jolly Old Elf,” said co-owner and head brewer John Bieranoski. “We’ve been competing since 2022, and we’ve medaled at least once every year.”
With the farm show taking place in January, Bieranoski said he treats the judges’ feedback as a way to help refine his products for future competitions.
Judges at the farm show have come through the Beer Judge Certification Program, a nonprofit that offers education and certification for competition judges. Those same judges tally the scores at most of the major competitions Allusion enters.
“We do several each year,” he said. “Last year, we brought home a first- and third-place from the farm show, for our traditional Polish ale. And after that, we brought home two national competition wins with it. We used feedback from the judges to bring our product to the next level.”
In addition to Allusion, Mars brewery Stick City earned a third-place finish in the Pale Bitter European Lager category for its Arctos 12 beer. And farther north, the Clarion River Brewing Co. finished first in the same category with its Golden Eagle; second among Strong Belgian Ales (Cacao Cupidon) and British Beer (Premature Burial); and third in the Amber European Lager category (Autumn Leaf Fiest).
Grains
In the grains division, Westmoreland County farmers brought home hardware of their own.
As a matter of fact, New Alexandria farmer Fred Slezak is Pennsylvania’s Grand Champion of Grains for 2026. He took first place for his barley and fourth place for his wheat — not a bad showing for his first time competing at the show.
“It’s a real honor,” said Slezak, who beat out Crabtree’s Vince Mangini in the barley category. Mangini took second place.
Both men grow grains for Allegheny Mountain Malt, which has partnered with local brewers to supply locally grown grains in an effort to shorten the supply chain. In addition, Hempfield farmer Alquin Heinnickel took third place in the oats category.
“We didn’t have things as bad, weatherwise, as the rest of the state,” Mangini said. “We got the right amount of rain at the right time.”
Slezak said growing barley specifically bred for malting probably helped him with the judges.
“It’s got a larger kernel than most other barleys,” Slezak said. “I credit Vince for encouraging me to enter, and my partner Brandon Yeo prepared the barley and did a lot of the planting. Without him, I probably wouldn’t have gotten it entered.”
Mangini said the grains division is also somewhat of a beauty contest.
“Fred did a really good job cleaning his grain, using some special screens to process his barley,” he said. “I told him it’s on now — I’m coming after him now that he beat me.”
Pennsylvania
Why Pennsylvania Gov. Josh Shapiro Guesting on Colbert Won’t Trigger the FCC’s “Equal Time” Rule
Pennsylvania Gov. Josh Shapiro is guesting on Stephen Colbert‘s The Late Show Monday, and there isn’t anything FCC head Brendan Carr can do about it — or as a result of it.
Last week, the Federal Communications Commission released new guidance that could revoke the exemption to its “equal time” rules that daytime and late-night talk shows have enjoyed since the ’90s. Basically, the equal time policy requires TV stations to provide equivalent amounts of air time to political candidates on both sides of the same election. (The onus is not on the specific show or even the broadcast network — it is the individual stations that must balance the scales. It’s also a bit on the campaigns themselves. When free time is provided to a candidate, a record is placed in the station’s political file. Opposing candidates can then submit an equal opportunities request.) Often the discrepancy is resolved with free commercial time to the candidate who was not booked on television.
The equal time rule has not historically applied to news coverage, and in 1996, Jay Leno’s producers won a carveout for talk shows. The Tonight Show performs “bona fide” news interviews, they argued, and thus should be granted the same exemption as a newscast. The FCC agreed, and late-night shows and daytime programs were no longer beholden to the requirement. (And perhaps not coincidentally, the following year, The View was launched.)
Until now.
“Importantly, the FCC has not been presented with any evidence that the interview portion of any late night or daytime television talk show program on air presently would qualify for the bona fide news exemption,” the FCC wrote on Wednesday, Jan. 21. “Moreover, a program that is motivated by partisan purposes, for example, would not be entitled to an exemption under long-standing FCC precedent.”
The Hollywood Reporter reached out to the FCC on Monday with a request for comment on this story, though we did not immediately receive a response.
Carr is targeting programming that leans left; he is President Donald Trump’s FCC chair, after all. Shapiro is a Democrat, and Colbert is among the most outspoken critics of Trump this side of, well, The View.
Shapiro, the sitting governor of Pennsylvania, but the equal time rule does not apply to politicians — it applies to political candidates. And through Shapiro officially launched his reelection campaign on Jan. 8 with events in Pittsburgh and Philadelphia — here comes the technicality — he is not yet legally a candidate for the office he currently holds. Pennsylvania law will not recognize Shapiro (or anyone else) as a gubernatorial candidate until Feb. 17, which is the first day to circulate and file nomination petitions. Then, Shapiro will need 2,000 signatures of support, a $200 check to file his candidacy, and a statement of financial interest to make the ballot.
Until then, Shapiro is on the trail — though not necessarily (or at least entirely) the campaign trail. The first-term governor is doing the talk show circuit pushing his memoir, Where We Keep the Light. Gov. Shapiro will appear on Tuesday’s episode of The View, and like CBS following tonight’s airing of The Late Show, your local ABC station need not set aside any airtime for Shapiro’s Republican opponent, Pennsylvania State Treasurer Stacy Garrity.
FCC chair Brendan Carr
Kevin Dietsch/Getty Images
The late night TV hosts are laughing off the latest FCC crackdown. On Thursday, the day after Carr targeted the time slot, Colbert feigned shock.
“What? What? A new crackdown on late night TV? That has enormous implications for me for four more months,” Colbert said. Oh yeah, did we mention his show was canceled?
Colbert added, “So, let’s talk about these new crackdown rules that my lawyer warned me not to talk about. The FCC is announcing plans to enforce long-dormant rules on appearances by political candidates on network talk shows. Oh, no. They’ve awakened the long-dormant rules, not seen since the mind-bending horrors of the pre-Euclidian variety show ‘Cthulhu Tonight!’ This is clearly an attempt to silence me, Jimmy [Kimmel and] Seth [Meyers].”
The same night, Jimmy Kimmel told America, “I might need your help again.” Jimmy Kimmel Live! was suspended this past summer for a few nights after Kimmel made a monologue joke that presumed the political leanings of conservative podcaster Charlie Kirk’s assassin. Though Carr certainly inserted himself into that controversy, it was the local ABC affiliates that really got the ball rolling. Jimmy Kimmel Live! returned to the airwaves after a few nights on ice, helping to cool the national temperature down some.
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