Class War in the Keystone State

Pennsylvanians are in the middle of a class war.

It has been a less-than-dramatic event.  Instead, it’s been a protracted affair, a slow but steady, one-sided war that’s been waged for decades now, and things have gone very nicely for the ruling, upper classes, thank you very much.

This war has been waged in the open right before the eyes of the public, and the public suffers the consequences of a losing combatant.  Even though this is a class war, nobody calls it that.  Is it because there are no cops and scabs smashing through picket lines, no strikers’ heads being busted, and no jailed workers or union leaders to rally around?

Certainly that’s part of it: workers rarely strike any more.  There were only three major work stoppages (those involving 1,000 workers or more) in the entire state last year, including the multi-state Verizon strike.  No, the arena of this class war isn’t the workplace or the streets. This life-and-death struggle is something of a stealth war, fought and won during semi-annual elections and in halls of the state capitol over the crucial issues of revenue raising and spending.  The battleground is the state’s budget.

It’s the budget, stupid

As Gov. Tom Wolf enters his third year in office, he faces the same obstacle that has plagued him the previous two – a huge Republican majority of “fiscally-responsible” yokels in both houses of the General Assembly who are pledged to oppose the level of spending required to run a modern state.  As a result, Pennsylvania faces a budget deficit for the current fiscal year, as well as for 2016-17 which is against the state constitution.

Wolf’s current budget proposal attempts, to his credit, to return spending for public education to pre-Corbett levels (but without accounting for inflation).  He has chosen to limit expenditures on everything else while raising revenue through regressive taxation: personal income and general sales taxes account for 69 percent of increased revenue in this year’s budget and 62 percent in next year’s.  Another huge portion will come from still higher taxes on tobacco products.

The sales tax and the flat income tax now regularly account for 70 percent of the general revenue raised by the state.  (Visit the Pennsylvania Budget Policy Center for a detailed analysis.)  Politicians and pundits say that Pennsylvania faces an intractable “structural” debt problem, but the reasons for this situation aren’t hard to fathom and the problem is far from unsolvable.  It is now unheard-of for our state “leaders” to suggest levying taxes on those who can afford to pay.  Wealthy Pennsylvanians and corporations that make huge profits here are considered sacrosanct.  So the money has to be raised from those of us of more modest means.

Royal Dutch Shell will receive some $1.65 billion in taxpayer incentives for locating its ethane cracker plan in Beaver County.  Shell says building the complex will create thousands of jobs, and that once it is up and running it will employ 600 workers.  This is all well and good but, besides the fact that many of those jobs will be taken by people living in neighboring Ohio and West Virginia, why should Pennsylvania taxpayers subsidize a profitable corporation like Shell?

The conventional answer is that if we don’t offer incentives to the company, another state will.  Large corporations and their executives are engaged in dividing and blackmailing the country, state by state, municipality by municipality.  And yet, they’re lionized in the general and financial media as fine, upstanding citizens whose goodness and motives are not to be questioned.

The biggest beneficiaries of state and local subsidies in Pennsylvania include Alcoa ($5.7 billion from 1995 to 2016), U.S. Steel ($100 million from 1995 to 2016), BNY Mellon ($76 million from 1997 to 2016), and PPG Industries ($54.6 million since 1992).  You can track government subsidies to corporations at Good Jobs First.

Wolf is to be commended for substantially raising K-12 spending, and he proposes small increases in vital programs that had either disappeared altogether (for example, the Conservation Corps) or were receiving next to nothing to begin with (shelter for the homeless, domestic violence and rape centers, mental and behavioral health services, long-term care, help for those with intellectual disabilities, and many other county-based services).  Funding for other crucial services hasn’t fare as well.  In just one example, the failure to restore cuts to the higher education budget leaves Pennsylvania’s spending 49th in the nation!

As mentioned earlier, corporations no longer shoulder a fair share of the state’s tax burden, nor do wealthy individuals, who pay taxes at the same rate as a fast-food worker.  Corporate and business taxes now generate about 15 percent of the state’s General Fund revenue, down from 28 percent in the 1970s.  According to the Budget Policy Center, “From 1988-1989 to 2002-2003, when business tax cuts first began, taxes on corporations were, on average, 22.25% of all General Fund revenues.”

To those of us who were around in the 1960s and 1970s, Pennsylvania may not have seemed like a Utopia but at least an adequately funded safety net existed and helped people.  There was money coming in from federal programs and the state raised enough money to fulfill its obligations while balancing the budget because corporations paid higher taxes – at federal and state levels.

Taxes on corporations and wealthy people have been low for more than three decades now.  They accumulate, hoard and waste great amounts of wealth, in turn increasing their lock on political power.  Life will get better for everybody when we start taxing these people at a socially just rate.  Taxes have been low for decades at the federal level, as well as the state level, so there is no legitimate “crying poor” on the part of the wealthy and corporations.

We must demand that the corporations contribute to the general fund at rates like those in the 1970s and 1980s.  We must demand a progressive state income tax and an end to endless sales and sin tax increases.  The future of the quality of life in this state hinges on these changes.

— James Collins

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2 thoughts on “Class War in the Keystone State

  1. Need to reshape the debate. Wolf, fake union leaders, top democrats, other black and white liberals don’t have any short or long term strategy to counter this budget crisis since they are caught in a box that both of them have created over the decades. The end result of their catering to the corporations and wealthy. Only by attacking and exposing the essence of the market system and the concentration of wealth can a sensible alternative that benefits the majority begin to be fashioned. It’s the only option.

    Like

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