Middle Class Pennsylvanians To See Little Benefit From Federal Tax Cuts

Wealthy Pennsylvanians Get Most of the Tax Cut

Harrisburg — Pennsylvanians earning $37,300 a year will get an average tax cut of $323 in 2003 under the tax plan just passed by Congress. Pennsylvania tax payers earning over $300,000 will get an average tax cut of $26,505 (see table) in 2003.

According to an analysis released today by the Washington D.C.-based Citizens for Tax Justice and the Keystone Research Center, Pennsylvanians earning under $37,300 will get significantly smaller tax cuts in 2003. Those earning $22,600 and $9,700 will get cuts of $100, and $15 respectively.

The 2000 U.S. Census found that 49.9% of all Pennsylvania households had an income of $39,999 or less.

In 2003, 28.7% of the total federal tax cut for all Pennsylvanians will go to those who make $823,000 or more per year. 7.0% of the cut goes to those earning $37,300. 2.2% goes to those earning $22,600 or less and 0.3% goes to those earning $9,700 or less.

“It’s really impossible to come to any other objective conclusion but that the Bush tax cut favors very wealthy Pennsylvanians,” said Steven Herzenberg, an economist and executive director of the Harrisburg-based Keystone Research Center.

“This is bad news for Pennsylvania’s middle class who already suffer under the burden of a very regressive state tax system,” said Herzenberg, noting that that those earning $55,500 or less pay nine percent or more of their income in state sales, property, and income taxes. “Those earning 27,000 or less already pay 13% of their income in state taxes.”

“The new federal tax cuts make it more urgent than ever that the Pennsylvania General Assembly take up the issue of tax reform. The state can raise the revenue for education and other needs from those getting excessive tax relief from the federal government. An income tax hike that spares those least able to pay more is the best way to do that” Herzenberg said.

Over the entire fours years of tax cuts the bottom 60% of Pennsylvania tax payers will get an average tax cut of $381. Over the same period the top 1% will get an average cut of $85,684.

Findings from the Citizen’s for Tax Justice analysis are available on-line at www.ctj.org.