If the New Budget Raises the Sales Tax, It Should Also Raise the Minimum Wage

If New Budget Raises Sales Tax, It Should Also Raise Minimum Wage
Nov. 13, 2015

In light of news reports that a state budget agreement will include an increase in the sales tax, Keystone Research Center labor economist Dr. Mark Price released the following statement today:

"The sales tax is a highly regressive tax that disproportionately burdens low-income workers. To offset the impact of this:

• It is imperative that the final budget agreement include an increase in the minimum wage.
• Increasing the minimum wage to $10.10 per hour would boost the economy by enabling 1.2 million workers to afford more of the basics.
• A $10.10 hourly minimum wage would also provide an estimated $231.5 million in savings for the state budget by reducing the state share of Medicaid costs.
• Property tax relief funded by a sales tax increase must be distributed in a progressive way.
• This relief should include a renter rebate.
• The rest of the property tax relief should go to moderate- and low-income homeowners, businesses and upper-income homeowners.
• As we have explained in our Policy Watch released yesterday, a minimum wage increase to $10.10 per hour, adjusted annually for inflation, will restore the purchasing power of the minimum wage lost since 1968."

The Pennsylvania Budget and Policy Center, a project of KRC, issued yesterday an analysis of the tentative budget framework that lists raising the minimum wage to $10.10 per hour as one of the revenue options available to budget negotiators.