PRINTER'S NO. 329
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE RESOLUTION
No.
64
Session of
2015
INTRODUCED BY THOMAS, COHEN, WHEATLEY, V. BROWN, KORTZ, M. DALEY
AND McCARTER, FEBRUARY 4, 2015
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 4, 2015
A RESOLUTION
Directing the Legislative Budget and Finance Committee to
conduct a study on the fiscal impact of replacing the single,
flat rate personal income tax with a graduated rate tax
structure in Pennsylvania.
WHEREAS, Pennsylvania is one of only seven states in the
nation with a single, flat rate tax on all income; and
WHEREAS, Thirty-four states in the nation, including the
contiguous states of Delaware, Maryland, New Jersey, New York,
Ohio and West Virginia, have a graduated rate personal income
tax structure; and
WHEREAS, A graduated rate tax structure takes into account
certain income classes, increasing tax based on taxpayers'
ability to pay; and
WHEREAS, In this Commonwealth, the current flat rate personal
income tax is authorized by Article III of the act of March 4,
1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, and is
the largest source of State tax revenue; and
WHEREAS, The personal income tax is levied against taxable
income of resident and nonresident individuals, estates, trusts,
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partnerships, S corporations, business trusts and limited
liability companies that are not federally taxed as
corporations; and
WHEREAS, The personal income tax rate has not been adjusted
downward since 1987; and
WHEREAS, The current personal income tax rate was set in 2004
at 3.07%; and
WHEREAS, The Commonwealth has been cited by The Institute on
Tax and Economic Policy as having one of the ten most regressive
overall state tax structures; and
WHEREAS, The higher the personal income tax rate, the
stronger the disincentive to work and to invest; and
WHEREAS, A graduated rate tax structure reduces income
inequality; and
WHEREAS, A graduated rate tax structure helps to protect
people during economic downturns because as income drops
individuals are placed into a lower tax bracket, which allows
for the use of income for necessities; therefore be it
RESOLVED, That the House of Representatives direct the
Legislative Budget and Finance Committee to conduct a study on
the fiscal impact of replacing the single, flat rate personal
income tax with a graduated rate tax structure; and be it
further
RESOLVED, That, in the study, the Legislative Budget and
Finance Committee consider:
(1) Personal income tax models used in the six states
surrounding this Commonwealth, taking into consideration all
of the following:
(i) tax rates and income brackets;
(ii) any standard deductions and exemptions
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permitted when calculating income tax;
(iii) whether income is based on wages or wages plus
investment income; and
(iv) property and sales taxes that are levied.
(2) The fiscal impact on State revenue of moving from a
flat rate to a graduated rate tax structure.
(3) Statutory changes necessary to effectuate
implementation of a new tax structure.
(4) Any other issues that may rise in the course of
conducting the study;
and be it further
RESOLVED, That the Legislative Budget and Finance Committee
seek input from other Commonwealth agencies and any other group
or individual who may have information relevant to this study;
and be it further
RESOLVED, That the Legislative Budget and Finance Committee
submit a report of its findings and recommendations to the
Governor and the House of Representatives within six months of
the adoption of this resolution.
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