How PA Compares to Other States in Taxes and Spending

[JPZenger]

Interesting article:

http://www.pennlive.com/midstate/index.ssf/2009/07/how_pennsylvanias_tax_burden_c.html

One big difference between PA and many other states is that we do not tax social security, pensions or other retirement income.

The State Constitution has been interpreted to mean that we cannot have a progressive income tax. Therefore, everyone pays the same percentage, if they have income above an initial amount.

[happyslug]

1. Shapp's Income Tax...

Shapp ran and lost his first run for Governor in 1966 advocating a State Income tax. The GOP opposed it even while the State's fiances went to hell during the best decade of the economy (Remember Reagan and his claim that he had the longest "Peace time" boom? That was do to the fact that the 1960s boom was even bigger in percentage increase terms AND longer, but it was during the Vietnam war and Reagan wanted people to brag about his boom and avoid mentioning the booms started by Kennedy, continued by Johnson and that ended with Nixon in 1971).

Anyway, Pennsylvania's budget was a mess, the main source of state income was the Sales tax and most economists believe that if the Sales tax nears 10% it stops being a nuisance tax (A tax everyone has to pay, but to low to do any active actions to avoid paying it) and becomes a tax burden when people do active actions to avoid paying it (and revenue goes DOWN not up do to extensive tax cheating). Raising the Sales tax did NOT promise to bring in enough revenue and the Democrats opposed raising the rates (They had done so over the previous 20 years but enough was enough by the 1960s). Thus Shapp's solution was a State Income Tax.

Shapp ran again for Governor in 1970, beating Bob Casey in the primary and defeating the GOP candidate in the fall (Under the terms of the 1967 Constitution, which was the result of the 1964 US Supreme Court "one man one vote ruling", how the State Senate was elected was changed to equal population districts AND governors were given the right to run for two consecutive terms for the first time since the adoption of the 1874 State Constitution, the basic structure of Government AND the State's Bills of Rights were not touched).

Shapp then forced through a progressive Income tax that was struck down by the Pennsylvania Supreme Court as in violation of the state's constitutional provisions that all taxes be "Equal". Shapp then forced through the present straight line Income tax, over GOP opposition both times.

Now I should point out Shapp won in 1970 for the State was in such a mess neither the GOP nor the Democratic party bosses wanted to take the heat for the hard decisions that were needed. The Democratic Party backed Casey in the Primary, who lost to Shapp as the Democratic Voters accepted the fact an Income tax was needed. In the fall election Shapp won for the same reason, the people as a whole of Pennsylvania knew an Income tax was needed and only Shapp was advocated one.

During his two terms in office, budgets were always a problem. The Boom of the 1960s was off and the US entered into a long period of economic down time (The recession of 1971, the oil embargo of 1973, the massive inflation caused by the Federal Government's refusal to raise taxes to pay for Vietnam, through President Johnson did balance the Budget in 1969, the last time it was truly balanced, through Clinton came close, but like Bush jr, Nixon when he succeed Johnson cut taxes on the rich). During this time period the budgets were an annual mess even with the Income tax. Shapp had to resort to withholding ALL pay to ALL state employees (including the members of the State Legislature) to force a budget through. Under Thornburg, who succeeded Shapp in 1978, the State Legislature set up their own saving account so the legislature is no longer dependent on the Governor to be paid without a budget (Leaving the Governor one less weapon to use to force through a budget) so such denial of pay is no longer possible, but it was needed to get the Income Tax passed, twice.

One last Comment on Shapp. As a good Jew he had no reason to declare Good Friday a State Holiday but as a former business man he realized that if you lose over 10% of your employees on any given day, the business will function by no where near what it can do on a normal day with normal number of employees off work. Thus Shapp was the last Governor to declare Good Friday a state Holiday. Many a state employee have told me their appreciated the extra day off work and hate the fact that none of the Governor since Shapp has made such a declaration. And these same employees have told me they have no objections to expanding such days off to include Jewish Holidays, Muslim Holidays, and that favorite religious "holiday" known as the "First day of Bush Season". You do not lose to many Jews or Muslims in the State on those religious holidays (Both exist, but their numbers do NOT come near the 10% test) but even the non-hunters notice the inability for their office to function on the first day of Buck Season (It was and is so bad that even the City of Pittsburgh Schools even closed for that day).

Shapp was probably the best Governor of Pennsylvania since the legendary Gifford Pinchot in the 1920s and 1930s (Pinchot was a GOP but a progressive within that party, and I have to put both over even ex-city of Pittsburgh Mayor and then Governor David L. Lawrence who had been Governor 1959-1963). I would put Shapp over Pinchot, but we are talking about two governors who served over 40 years apart and in two different, not only political but economic environments.

Did I mention Shapp OPPOSED the Death Pends, vetoing any bill that came to his desk (His veto was overridden) but then refusing to sign any death warrants thus stopping any executions during his governorship and delaying the need for Federal Review of them till into the next administration (Causing even further delay in such executions).

More on David Lawrence(Governor 1959-1963):
http://en.wikipedia.org/wiki/David_L._Lawrence

More on Milton Shapp (Governor 1970-1978):
http://en.wikipedia.org/wiki/Milton_Shapp

More on Gifford Pinchot (Governor 1923-1927, 1931=1935):
http://en.wikipedia.org/wiki/Gifford_Pinchot

[JPZenger]

2. Interesting history

Thanks for the background.

I recognize that Shapp was personally honest, but most people remember his years as a time when there was serious corruption in State and Federal officials in PA, most of whom were Dems.

[happyslug]

3. Yes, and a funny thing happened, after he left office all investigation stopped.

I remember the state legislature investigation of the state government, the legislature was controlled by the GOP in the last few years of Shapp's administration. All that investigation did was try to find things that was going wrong with the administration for political purposes, the GOP denied it but closed down ALL investigations between the time Thornburg won election on a "Clean Government" Platform and the time he was sworn in. The GOP did NOT want to find anything wrong with a GOP Controlled Government.

As to the major scandals, yes Democrats were indicated but the problem could be traced back to when the GOP controlled the Government or do to how the system had been run for years. The best example of this was the Scandals involving the then new Department of Transportation (Which had been created when the old Department of Highways was merged with three other Government departments).

No one complained in the 1960s about the corruption in the Department of Highways for roads were being built on borrowed money, the problem arose when the money came due under Shapp under the then new Department of Transportation (PENNDOT was created in 1970 during the race for Governor, so Shaffer actually signed the bill, but Shapp had to implement the program).

The GOP did NOT want to point out that the problem existed under Shaffer so concentrated on Democrats who had been involved (Yes much like how the GOP looked at Democrats under Bush jr, the GOP policy is simple, claiming the Democrats are corrupt is the easiest way to get elected when the people want the government to do what the GOP opposes).

I do not want to defend the criminals who did commit fraud under Shapp, but the problem could NOT just end with the election of a GOP Governor, yet all such investigation ended with the election of Thornburg. Today, while Obama wants to put the problems caused by Bush jr behind him, you still hear of those problems. Come the first year of Thornburg all such references and investigation ended, like the Government, including former government officials, were 100% clean in 1979 while all of them had been corrupt in 1978, the only difference being that a Democrat was Governor in 1978, but a Republican was Governor in 1979.

Corruption does not end like that, but Investigation of Corruption does if the sole purpose of the Investigation is political advantage as oppose to weeding out corrupt people.

People forget how much the GOP hated Shapp, for he had straighten out the Finances of the State more then any other Governor. Yes, he had appointed some people who took advantage of the changes, but Shapp made no effort to cover up for them and when found out he removed them. Employment by the state peaked with Shapp, do to his efforts to get the Government to run properly. Shapp actually started to reduction in the State Work Force in the last two years of his administration, something Thornburg would "Brag" about when he ran for re-election in 1982.

An an example of this Thornburg claimed to have reduced the Size of the State Government by making it more efficient, but in the days before the net all Thornburg did was make it harder to obtain Government Services. Under Shapp I could do to Downtown Pittsburgh and get a new license plate for my car, that was cut out by Thornburg who re-centralized such services in Harrisburg. When Casey was elected in 1986 you started to see a return to a concern on providing services to the Public via things like the AAA for vehicles services and even plates but that was the product of greater Computer capability that Casey was going to exploit to provide better services to the Public, a concept opposed by the GOP under Thornburg and Ridge (Who succeeded Casey as Governor in 1994). Today we have the net that provides a good bit of the services that Shapp was providing with people in 1978, and that Thornburg cut out to save money.

Yes, things were corrupt, but the Pennsylvania Department of Highways had been corrupt for decades under both Parties (And most of the time under the Control of the GOP) people forget that from the Start of the US Civil War to Shapp, Pennsylvania only have Five Democratic Governors as opposed to 21 Republicans. The old Department of Highways really came into their own with the invention of the Gasoline tax under Governor Earle (The Only Democrat elected Governor between 1894 and 1954), this fueled the expansion of the Pennsylvania Highway system under subsequent GOP administrations till the state Economy started to go bad again and the State Elected Governor Leader as the next Democratic Governor in 1954, 20 years later when the State needed to raise taxes again and the GOP refused again (Leader increased the sales tax to 3% from the 1% his predecessor GOP Governor Fine had passed, the then GOP Controlled State Senate refused to pass an income tax instead and thus both Fine and Leader had to accept a 1 % then 3% sales tax instead).

Governor Leader is noted for one thing, he is the first Pennsylvanian Governor who was elected as a Democrat to be succeeded by the Democrat since Governor Shunk succeeded Governor Porter in 1845. David Lawrence succeeded Leader and raised the Sales tax to 4% again after the GOP refused to consider an Income Tax. GOP Governor Scanton, who succeeded Lawrence in 1962, had to raise the sales tax to 5%, which Governor Shaffer who succeeded Scanton had to increase to 6% in futile attempts to balance the state Budget without an Income tax.

Shapp elected in 1970 managed to finally get an Income Tax passed, something Earle in the 1930s, Leader and Lawrence in the 1950s could NOT get passed do to GOP opposition. One of the reason Shapp was able to do so is he had the first Pennsylvania Controlled State Assembly AND Senate since 1936 (The GOP had controlled both or one or the other, mostly the State Senate since 1936).

The by the time of Ridge the NET had become to strong NOT to adopt a more decentralized system but even this was opposed unless it cut the number of state employees, even if such cut in personnel hurt the ability to provide services to the Public. The concept that Government exist to provides services is something the GOP tends to forget and the Democrats get elected to do AND to take the heat for the taxes needed to pay for those services.

Back to the concept of Corruption, it has been a constant GOP theme in PA every time the Democrats are in control of the Government. Earle and his Democratic Controlled State House and Senate was accused of it in the mid 1930s, Leader and Lawrence were accused of it in the 1950s (Through both had to deal with a GOP controlled State Senate) and the GOP reverted back to the same theme in the mid 1970s once they regained control of the State House. One of the Jokes of the time was that the GOP knew where all the Corruption was, for they had set up the system so that the only way anyone would take such a job was for the bribes, anyone who could do the job could make more money elsewhere, thus the only people taking the job had to take a pay cut and they would sooner or later have to make up that pay cut by taking bribes.

Thus when Thornburg was elected and the GOP again won control of the State House and Senate all investigation of Corruption within the State had to stop less they be forced to look at GOP involvement with corruption. The GOP had hated Earle in the 1930s and Shapp in the 1970s for both were millionaires who had no reason to be corrupt (as had been Leader in the 1950s, Lawrence had NOT been a millionaire but he had independent source of Income so was above accusation of personal Corruption, thus the attacks was against their underlings not them personally for such attacks had no traction given the four Democratic Governor's other sources of Income).

List of PA Governors with some background on each:
http://www.portal.state.pa.us/portal/server.pt/community/governors/4282

[livetohike]

4. I can remember protesting Shapp's arrival at the Indiana County

Airport because he wanted to raise the tuition at state colleges :-). Looking back now, I have to smile. I think tuition was $50.00 a semester and doubled to $100.00. It was a lot of money then.

[happyslug]

5. I traveled many a time to Indiana University of Pa in the early to late 1970s.

I did not graduate High School till 1977, but I had three older sisters who took classes at IUP. My second eldest had gone to Pitt but then went for graduate school in education at IUP. I believe she started at IUP around 1969. My next three elder sisters started to go to IUP after their graduated form High School, in 1973, 1974 and 1975. The later two transferred out in 1977 and went to Robert Morris (Where I went to Collage) but I went on many a trip dropping one, two or three sisters off (With their school books and property needed during their time at IUP) starting in 1970 as a passenger and labor and then after I turned 16 as a driver (Yes, I drive US 22 with its suicide lanes in the 1970s, today I take US 22 between Pittsburgh and Johnstown and see it slowly being converted to a proper four lane highway instead of that two lanes with passing lanes ever few miles or so that was characteristic of old US 22 and the main reason it was call a killer highway.

I hate to say it I was in the "perfect" generation, I was to young to have to register for the draft under the old WWII to Vietnam Draft act and to old to have to register under the New Selective Service Act passed under Carter. As to Collage, most of my tuition was paid by the State or the Federal Government in the forms of Grants. Such high rates of Grants ended just as I graduated Collage in 1981 (Reagan switch from grants to loans). I did have to take out one loan for my last semester, something like $600, a minor amount even at that time given I was going to a Private Collage (Robert Morris) not a state owned or state related school. When I went to law school a few years later it was all loans, no grants, that is how fast the change occurred under Reagan. I had younger sisters and brothers that had to take out extensive loans to pay for Collage, something I did not have to do (For my undergraduate degree), and my older siblings had also had to take out extensive loans (except my eldest brother who after serving in the US Navy was eligible for the Old GI bill, repealed in the 1980s and replaced several years later by that joke of a GI bill that now calls itself the GI Bill).

Comment on the GI Bill, the WWII through Vietnam era GI Bill paid people a monthly payment if they went to school, that payment not only could be used for tuition but for housing and any thing else as long as the Veteran stayed in school full time, as defined under the GI bill. The GI Bill passed in the late 1980s to "help" veterans had several changes, first the Veteran had to SAY he wanted the GI Bill for Education while in the service AND his pay was reduced to set up the funds for his or her subsequent collage education. If the Veteran subsequently did NOT go to Collage, that money was lost (The veteran could NOT get it back if he did NOT go to Collage). Thus the military personnel had to make a decision BEFORE he or she even enlisted, was the enlistment the first step in getting a Collage Education, if yes, take the pay deduction knowing you will NEVER get it back unless you went to Collage OR skip the program and go with whatever training the Military gave you. Since 9/11 things have changed even in the GI Bill so the above I believe is no longer the situation, but it was the situation till 9/11 and for a few years later.

The 1980s-1990 GI Bill, The Montgomery GI Bill
http://www.gibill.va.gov/GI_Bill_Info/benefits.htm#MGIBAD

Post 9/11 benefits:
http://www.gibill.va.gov/GI_Bill_Info/CH33/Post-911.htm

VA Web site of the above:
http://www.gibill.va.gov/

[livetohike]

6. It's possible then, that I knew one of your sisters

I was at IUP from 1970-1974 (first at the branch in Kittanning from 70-72 but went up to main campus many weekends). I was an education major, but did both of my student teaching experiences in my Senior year. I had a National Direct Student Loan and was on work study as well. My Dad was a steelworker. Even at those low tuition rates, we had to borrow money.

I have a niece down at The George Washington University - tuition is $52,000/year :eyes: (and I was sweating paying back my loan - oh yes, and worrying that because I participated in anti-war protests I might be seen by the FBI and my NDSL would be taken away).

Thanks for the links, too :hi:.