As the budget hole keeps getting deeper and deeper for state government, the pressure is on – from some quarters – for the Pennsylvania Legislature to raises taxes.
It’s a pressure that must be abated. For this insidious policy of tax and tax and tax at ever higher rates and spend and spend and spend in even higher measure must be brought to its knees.
The state Department of Revenue says April tax collections were 13 percent below expectations at $537 million. That puts the commonwealth on a path to a $3 billion-plus shortfall next summer.
While some have noted that a shift in the law that moved the deadline for corporate net income tax filings from April to May is responsible for the latest lagging numbers, legislative officials tell the Post-Gazette it accounts for only $200 million.
Democrat Gov. Tom Wolf has cut the budget. But he’s also proposed tax hikes of $1 billion, including an onerous, industry-punishing tax on Marcellus shale natural gas extraction.
At least some in the Republican-controlled House favor expanding legalized gambling (see below) and privatizing some aspects of wine and liquor sales. The GOP-controlled Senate has not endorsed the plan.
Simply put, raising taxes should be off the table. To paraphrase the captain in 1967’s “Cool Hand Luke,” what we have here is a failure to communicate the failure of the systemic cycle of raising taxes to cover budget shortfalls.
Government would be better to cut taxes – and regulations – to facilitate more business activity, thus generating more money for state tax coffers.
After all, the less you tax something, the more you get of it. It’s that elementary. It’s that fundamental. That Harrisburg cannot appear to learn this lesson suggests critical thinking skills never were taught – or taught for naught.
Executives of nine Pennsylvania casinos are opposing legislation that would authorize up to 35,000 video slot machines in everything from Keystone State bars and bowling alleys to fire halls and social clubs.
Well, of course they are. They fear it would end their state-sanctioned monopoly on gambling.
The Philadelphia Inquirer reports that in a letter to House and Senate leaders, the operators (excluding Penn National) argue:
Such operations “will do nothing more than rob Peter to pay Paul, cannibalizing the casinos and the taxes they generate.”
Talk about the raven chiding blackness. Talk about cannibals taking offense to cannibalism. Talk about a false narrative.
By varying estimates, there already are between 15,000 and 40,000 illegal VGTs (video gaming machines) operating in Pennsylvania watering holes and other parlors of regular neighborhood visitation. (Ahem.) Anecdotal information suggests the latter number.
It’s anybody’s guess what the value of this underground economy is but it is not insignificant. It’s difficult to imagine that legalizing fewer machines would have much, if any, effect on the big casinos.
But it’s not hard to imagine that legislation proposed in Harrisburg would hurt not the big casino players, but the little “illegals” made legal.
How’s that?
First off, think of the specter of fewer machines generating less play and less revenue.
Then think of the typical government red tape – all the overregulation that will come with it.
Then think of this:
Legislators see legalizing neighborhood VGTs as a way to help close the growing state budget deficit. There are predictions of increased revenues of $100 million in the first year and $500 million, half-a-billion dollars annually, once fully implemented.
But, and it’s a very big “but,” only about 4 percent of those proceeds would be remitted to the local jurisdiction hosting those now-legalized video gaming devices.
It’s more likely in such a scenario that legalizing VGTs would do more harm to local economies (albeit the underground economies) than help them. “The State,” acting like “The State,” actually would be sucking money out of those local jurisdictions.
Why not let the local jurisdiction keep a majority of the legalized VGT proceeds? Would that not reduce the demands on “The State,” easing part of the budget crunch?
Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
