roTecTion acT for TaxPayer P

ayer ediTion! Pennsylvania TaxP

The Problem:
State Spending is Growing Faster than Taxpayers’ Ability to Pay • Despite dramatic growth in state government spending, Pennsylvania ranks among the worst states in the nation in key economic performance indicators. o From 1991 to 2011, Pennsylvania ranked 41st in job growth, 46th in population growth, and 48th in personal income growth.

The SoluTion:
The Taxpayer Protection Act (TPA) Would…

• Reasonably limit future growth in state government spending to inflation plus population growth. • Require the government to prioritize spending. • Create a Rainy Day Fund to be used to balance the budget in times of recession. • Provide tax relief for working families. • Stimulate job growth by returning surplus revenues to taxpayers.

• State government spending has consistently outpaced the growth of personal income. In fact, per family of four, total state spending (adjusted for inflation) grew by more than $12,000 since 1970. • Prior to 2011-2012, Pennsylvania’s total operating budget increased for more than 40 consecutive years. o Legislators spent every dollar available during economic growth, then raised taxes during recessions.

Why A TPA?
The TPA encourages Fiscally responsible budgeting and Spending • A spending limit merely slows the growth in spending, it does not mandate any cuts. o If the TPA had been applied from 2003 to 2011, a cumulative $31.5 billion would have remained in the hands of taxpayers— almost $10,000 per family of four. o Under the TPA index, state spending in FY 2012-2013 could increase by 2.29 percent—or $963 million. • Government spending should be limited to core programs and services. Increases should be tied to the increase in the prices (inflation) and the number of people served (population growth). • The TPA is not a hard cap, but could be exceeded: 1) in cases of emergency, 2) with voter approval or 3) a supermajority of legislators. • The TPA will ensure policymakers prioritize spending, and do so with regard to taxpayers’ ability to pay.

www.commonwealthfoundation.org

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